NEW DELHI, Feb 2: Silver prices witnessed a sharp sell off for the second consecutive session on Sunday, plunging 9 per cent to hit the lower circuit in futures trade, while gold also ended lower as investors booked profits following a steep recent rally.
On the Multi Commodity Exchange (MCX), the March silver contract fell by Rs 26,273 to close at Rs 2,65,652 per kg, its lower circuit limit. The white metal has now shed over one-third of its value across the last two trading sessions, reflecting heavy liquidation after touching record highs earlier in the week.
Weekly data showed silver down nearly 21 per cent from its January 23 peak, underlining the scale of the correction underway.
Gold futures also saw sharp swings during the session. The April contract initially slipped to the lower circuit in early trade before recovering partially to settle at Rs 1,48,104 per 10 grams, down 3 per cent from the previous close. The yellow metal had registered a steep decline in the prior session after hitting an all-time high.
Market analysts attributed the decline to aggressive profit booking and long unwinding at elevated price levels. Pranav Mer, Vice President at JM Financial Services, said the recent correction was a natural fallout of overheated bullion prices, noting that both metals have fallen significantly from their peaks.
International futures markets were shut on Sunday due to a holiday, but global cues remained weak. On Friday, gold and silver contracts on the Comex recorded deeper losses than domestic markets, following sharp reversals from lifetime highs.
Analysts also pointed to a firmer US dollar and expectations that interest rate cuts may be delayed, after comments from Federal Reserve Chair Jerome Powell, as factors weighing on precious metals. Additional pressure came from higher margin requirements imposed by global commodity exchanges, which tend to amplify price volatility.
Looking ahead, experts expect bullion prices to remain volatile in the near term, with scope for further corrective moves before stabilising at lower levels.