Why Did Silver Prices Plunge By ₹10,000 In A Day?

On Jan 8, the silver market saw heavy volatility. Silver futures on the MCX (Multi Commodity Exchange) witnessed an intraday collapse.

Prices for the Mar 2026 contracts declined by ₹10,000, sliding from a previous close of $2,50,605/kg to an intraday low of ₹2,40,605/kg.

This 2.67% decline in a single session was after a historic surge in Dec 2025. During Dec 2025, silver touched record highs of USD 83.60/oz.

There was a ripple effect felt across the equity and investment landscape. Shares of Hindustan Zinc, India’s largest silver producer, declined by 5%. Also, the silver ETFs (Exchange-Traded Funds) retreated by 3%.

So, does this sudden erosion of value signal a deeper structural correction for the white metal?

What is Pressuring Silver

The global financial markets are going through technical adjustments. These adjustments have led to price volatility across assets.

Furthermore, it is a known fact that silver and gold experienced outsized gains in 2025. The volume of selling required to meet these new allocations has been huge.

This high selling volume has created a temporary supply surplus in the futures market. It is now exerting downward pressure on prices despite the underlying physical demand.

The resurgence of the US dollar has also considerably increased this technical sell-off. So, market participants are recalibrating their expectations for interest rates and economic growth. Now, dollar-denominated assets like silver are more expensive for international buyers.

Precious metals share an inverse relationship with the US dollar. So, when the currency gains momentum, non-yielding assets can face a repricing event.

Lastly, the current sentiment can be further influenced by upcoming labour market data from the United States. This combination of institutional reweighting and macroeconomic headwinds could be dragging the silver prices down. But is this a fundamental shift in the dollar-bullion relationship, or is this simply a tactical pullback?

Role of Industrial Utility

Silver has considerable industrial use cases. Thus, it has been able to sustain an attractive valuation despite the recent futures market storm.

As a metal, silver works differently from gold because it is an important industrial commodity as well as a financial asset.

It has an important role in the global transition towards renewable energy. Industry experts have pointed out that structural demand in these sectors has remained strong for several years and has outstripped the annual supply from mining operations.

This continuous supply-demand deficit has provided a constructive medium-term outlook for silver.

As prices stabilise near their historical support zones, the focus is likely to shift back to the scarcity of physical refined silver. Currently, the challenge for the market is to distinguish between the noise of short-term volatility and the signal of long-term industrial necessity.

This structural deficit is a main reason why many institutions are maintaining a constructive outlook for the metal even with the temporary price crashes.

Impact on Stocks

A primary producer like Hindustan Zinc produces high-purity refined silver. Its top line is directly sensitive to movements in global benchmarks. A sharp drop in the market price of the metal led to a contraction in profit margins, triggering immediate reactions from equity investors.

This explains the fall in the Hindustan Zinc share prices after the breach of the main psychological levels in the bullion market.

Similarly, retail investors in silver ETFs are experiencing the downside of the metal's volatility, which often exceeds that of gold.

The bullion price movement suggests the metal may remain choppy for extended periods after a peak. However, its historical performance suggests that such corrections are part of a larger cyclical movement.

The recent price action is an important reminder of the risks associated with high-momentum trades and the importance of monitoring support levels on global exchanges like COMEX (Commodity Exchange Inc.). The current intraday drop has been severe. However, it can be viewed against the backdrop of the extraordinary gains recorded over the past year.

As the market digests the current sell-off, the focus will remain on whether the metal can hold its ground at lower price tiers or if further liquidations are on the horizon. Is the current dip in mining stocks and ETFs a strategic entry point for long-term believers in the silver story?

Sources:

Economic Times
Moneycontrol