Silver Price Crash: MCX Plunges 15% After Record Highs

Silver prices experienced a dramatic sell-off on the Multi Commodity Exchange (MCX) on Friday, January 30, 2026, plunging 15% to hit the lower trading circuit. The sharp correction wiped out a significant portion of recent gains, coming just a day after the white metal had surged to an all-time high.

A Historic Rally Meets a Sudden Halt

The March silver futures contract on the MCX settled at approximately ₹3,42,390 per kilogram, a steep decline from the previous day's close of ₹3,99,893. This reversal followed a powerful rally that saw prices peak at a record ₹4,20,048 per kilogram on January 29. The intraday crash represented a loss of nearly ₹70,000 per kilogram from Thursday's settlement, erasing a substantial part of the month's gains in a single session. The intense selling pressure reflected a broader sentiment shift across global commodity markets.

Global Markets Mirror the Decline

The downturn on the MCX was not an isolated event but part of a worldwide sell-off in precious and industrial metals. On the Comex, spot silver fell sharply by over 14% to around $18 an ounce, retreating from its recent peak above $121. Gold also faced heavy selling, with prices dropping 8.9% to $1,894.23 an ounce in New York. Other metals followed suit, with platinum and palladium slumping, while copper on the London Metal Exchange fell 3.4%, pulling back from its own record highs.

Profit-Taking After an Overheated Rally

Analysts widely attributed the crash to aggressive profit-taking by traders. Silver had been on a historic run, gaining over 50% in January alone and approximately 170% over the preceding 12 months. This parabolic rise pushed technical indicators into overbought territory. For instance, gold's relative strength index (RSI) had reached 90, a level not seen in decades, signaling that a correction was likely. After such a rapid ascent, many investors chose to lock in their profits, triggering the initial wave of selling that quickly gained momentum.

The US Dollar and Federal Reserve Speculation

A significant catalyst for the sell-off was a sudden rebound in the U.S. dollar. The currency strengthened following reports that President Donald Trump intended to nominate former Fed Governor Kevin Warsh as the next Federal Reserve Chair. Market participants interpreted this potential appointment as a hawkish signal, anticipating tighter monetary policy and higher interest rates. A stronger dollar makes commodities priced in the currency, like silver and gold, more expensive for holders of other currencies, thereby reducing demand and putting downward pressure on prices.

Technical Factors and Increased Margins

The decline was amplified by technical market dynamics. A 'gamma squeeze' effect, driven by a large volume of options trades, had previously forced dealers to buy as prices rose. The same mechanism worked in reverse during the sell-off, compelling them to sell as prices fell, which accelerated the downward spiral. In response to the extreme price swings, the CME Group announced an increase in margin requirements for Comex gold and silver futures, effective the following week. Silver margins were set to rise from 11% to 15%, making it more expensive for traders to hold leveraged positions and further encouraging them to liquidate their holdings.

Key Price Movements in the Metals Market

Long-Term Outlook Amid Short-Term Volatility

Despite the severity of the correction, many analysts believe the long-term fundamentals for silver remain positive. The crash is viewed by some as a necessary technical correction after an unsustainable rally rather than a fundamental shift in the market's outlook. Underlying support for silver comes from two primary sources: its role as a safe-haven asset and its growing industrial applications. Persistent geopolitical tensions and macroeconomic uncertainty continue to drive investment demand for precious metals as a hedge against inflation and instability.

Industrial Demand as a Core Pillar

Furthermore, silver's industrial demand is robust and expected to grow. The metal is a critical component in high-growth sectors such as solar panels, electric vehicles (EVs), and electronics. As the global transition to green energy accelerates, the demand for silver in manufacturing is projected to tighten the supply-demand balance, providing a strong floor for prices over the long term. Rajkumar Subramanian of PL Wealth noted that this combination of safe-haven appeal and industrial consumption has been a key driver of the metal's performance.

Conclusion: A Market Reset

The dramatic crash in silver prices on January 30 served as a stark reminder of the metal's inherent volatility. The sell-off was a confluence of profit-taking from an overbought market, a resurgent U.S. dollar fueled by Federal Reserve speculation, and technical selling pressure. While the short-term outlook remains uncertain with the potential for further price swings, the fundamental drivers of silver's value, including strong industrial demand and its role as a monetary hedge, remain intact. Investors will be closely watching for cues from U.S. monetary policy and global economic data to navigate the market ahead.