Volatile metal: Silver swings 14% in a day in global markets

MUMBAI: Silver market globally witnessed one of the most volatile sessions in recent years on Monday as the price of the white metal fluctuated over 14% in intraday trades due to a confluence of factors. The impact was witnessed in the Indian market as well.

In the international market, silver prices spurt to close to $84/ounce, while on the MCX, silver futures, after scaling a new all-time high at over Rs 2.5 lakh/kg, slipped by over Rs 22,000 (about 10%) to about Rs 2.3 lakh.

While there were traders who booked profits after a jump of over 25% in a month, a decision by the Chicago Mercantile Exchange (CME) to hike margins on silver futures by 25% also weighed on its price. Hopes of a peace deal between Russia and Ukraine also softened prices, analysts and traders said. To complicate the situation further, trading volumes were thin during the holiday season. According to Kaynat Chainwala of Kotak Securities, silver's unprecedented surge this year has been driven by structural tightness, supported by multi-year supply deficits, persistent physical shortages, and strong industrial demand, particularly from solar and electric vehicles. Favourable macro conditions, including the US rate cuts, have further underpinned the rally, she said.

On Monday, "prices pulled back sharply to $74 an ounce after hitting a fresh record near $84, largely reflecting profit-taking and higher CME margin requirements, which can prompt leveraged participants to reduce exposure," Chainwala said.

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