Silver Prices Plunge Amid Higher Yields and Dollar Strength

Silver prices have been experiencing volatility in recent times, with MCX silver falling after a sharp correction. The price of MCX silver is currently at ₹2,26,270/kg, with a change of +0.43%. In comparison, the price of 999 Silver is at ₹2,26,750/kg, up by 0.64%.

The main reason behind the pressure on silver prices is the focus on yields, the dollar, and interest-rate expectations in the markets despite ongoing geopolitical tensions, according to Ponmudi R, Founder and CEO of Enrich Money. He explained that higher yields increase the opportunity cost of holding gold and silver, which do not generate interest income. A stronger US dollar also makes precious metals more expensive for buyers using other currencies.

Furthermore, silver is facing additional pressure due to its dual use in both investment and industrial purposes. While gold is primarily influenced by safe-haven demand, central-bank buying, real yields, and the dollar, silver's price is linked to manufacturing activity and industrial demand. Concerns around global growth, manufacturing activity, and demand from China can weigh on silver prices, particularly in the solar, electronics, and manufacturing sectors.

Vikram Subburaj, CEO of Giottus.com, suggests that investors should watch US inflation and employment data, Treasury yields, the dollar, and crude oil prices for the next direction of bullion prices. For long-term investors, he recommends considering staggered buying rather than attempting to time the market bottom. For leveraged traders, Subburaj advises reducing exposure and using strict stop-losses.