MCX silver declined by 4.48% on Thursday, April 2 as US President Donald Trump’s strong remarks regarding Iran heightened geopolitical tensions, contributing to volatility in global markets.
Silver futures set for May 5 witnessed an even sharper decline, plummeting 7.8%, or ₹19,001, to reach an intraday low of ₹224,500, on Thursday.
Throughout the trading session, it also peaked at ₹242,800, which was 0.28% lower than the previous day’s closing price. Analysts predict that volatility will persist, advising investors to exercise caution, take profits during price rallies, and avoid starting new long positions at elevated price levels.
In the global market, the price of spot silver fell by USD 5.49, which is a decline of 7.32%, bringing it down to USD 69.57 per ounce on Thursday, April 2.
Commodity markets are closed today (Friday, April 3) due to Good Friday.
Why Trump’s speech hit silver so hard?
Donald Trump’s recent national address notably changed market predictions, causing a significant reaction in silver prices. His assertion that the US would hit Iran “extremely hard over the next two or three weeks” indicated a prolonged conflict rather than steps toward de-escalation.
According to experts, the markets had partially accounted for a ceasefire or a diplomatic agreement, and this change in rhetoric heightened concerns about an extended war and the risks of stagflation. Consequently, investors opted to increase their cash holdings instead of expanding their already full positions in precious metals, which placed downward pressure on silver.
At the same time, the address strengthened the belief that US interest rates may stay elevated for an extended period, resulting in an increase in the US dollar and real bond yields. This scenario is generally unfavorable for precious metals.
Since silver, like gold, is an asset that does not earn interest and is priced in dollars, a stronger dollar makes it costlier for international buyers, while higher yields decrease the attractiveness of holding these assets in comparison to interest-generating instruments.
In spite of persistent geopolitical conflicts, these macroeconomic factors—especially currency strength and yield interactions—overpowered safe-haven interest, causing a significant drop in silver prices.
Technical Outlook
Jigar Trivedi, Senior Research Analyst at IndusInd Securities, said that MCX Silver May futures is likely to drop to 220,000/kg.
“We recommend going short on every bounce,” advised Trivedi.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
