Silver Crashes Sharply On MCX After Global Price Collapse, ETFs & Leveraged Positions Come Under Heavy Pressure

Mumbai: Silver prices on the Multi Commodity Exchange (MCX) saw a sharp fall on Thursday, February 5, following a sudden crash in global silver prices. Prices opened about 6 percent lower and quickly extended losses to nearly 9 percent in early trade. Within minutes of market opening, silver lost around Rs 24,196 per kilogram. It is currently trading near Rs 2,44,654 per kg, showing how fast the metal prices have fallen.

Global Prices Trigger Panic Selling

The fall in India is linked to a sudden global price crash. International silver prices dropped below USD 75 per ounce after trying to hold near USD 90 per ounce during early Asia-Pacific trading hours. Global spot silver prices are currently down more than 13 percent. These sharp swings have created panic among traders and investors worldwide, leading to heavy selling across markets.

Silver ETFs See Heavy Losses

Due to the sharp fall in silver prices, Silver Exchange Traded Funds (ETFs) are also trading in deep losses. Most silver ETFs are down between 13 percent and 15 percent in early trading on Thursday. Silver ETFs have become highly leveraged investment products. As of February 4, Nippon AMC Silver ETF alone had leveraged positions of more than Rs 1,300 crore under the Margin Trading Facility (MTF).

Recent Record Highs Make Fall More Painful

Just a few days ago, silver prices on MCX had touched record highs above Rs 4 lakh per kilogram. However, a sharp correction last week pulled prices down sharply. Thursday’s global crash has now erased the recovery seen on Tuesday and Wednesday, when prices had slightly bounced back from oversold levels.

Gold ETFs Also Under Pressure

The fall is not limited to silver. Gold ETFs in India are also trading lower by around 4 percent to 6 percent on Thursday morning. However, gold spot prices have not fallen as sharply as silver, showing relatively better stability compared to silver markets.