Silver prices crashed dramatically on Monday, December 29, dropping ₹21,000 per kilogram in a single session that shocked commodity markets. MCX Silver March Futures plummeted from an all-time high of ₹2,54,174 per kilogram to ₹2,33,120 within hours as traders rushed to exit positions.
The collapse followed silver’s historic breach of the $80-per-ounce mark in international markets, only to tumble below $75 as selling pressure intensified. Spot silver retreated to $75.32 per ounce after touching $83.62 earlier in the day. The white metal had surged 181 percent year-to-date before Monday’s reversal.
Why Silver Price Fell Up to ₹21,000
Profit booking drove the sharp decline after silver’s unprecedented rally to record levels. Traders who had ridden the massive gains throughout 2024 decided to lock in profits at historic highs. The white metal had delivered extraordinary returns, rising more than six times since pandemic lows.
Reports of progress in Ukraine peace talks between US President Donald Trump and Ukrainian President Volodymyr Zelensky reduced geopolitical tensions. Trump stated on Sunday that the two leaders were “getting a lot closer, maybe very close” to an agreement. This development diminished safe-haven demand that had supported precious metals.
The Chicago Mercantile Exchange increased margin requirements for silver futures contracts effective Monday. The exchange raised the initial margin requirement for March 2026 silver futures to around $25,000 from $20,000 earlier this month. This move forced leveraged traders to either add funds or exit positions.
What Is the Main Reason Behind It
The primary catalyst was the parabolic nature of silver’s rally that triggered widespread profit booking. BTIG financial services firm warned that such parabolic moves typically end with swift reversals rather than gradual corrections. “Parabolas only end one way, with an equal and opposite downside reaction. They do not correct through time,” the firm stated.
Jonathan Krinsky, BTIG analyst, noted that silver’s 10 percent gain on Friday marked one of its biggest single-session advances on record. He pointed out that the last comparable move occurred in 1987 and was followed by a 25 percent decline in subsequent weeks. Silver currently trades 89 percent above its 200-day moving average, signaling an overheated market.
How This Will Impact
Investors who bought at peak levels face significant losses as the market corrects. Manish Banthia, chief investment officer for fixed income at ICICI Prudential Mutual Fund, cited historical precedents. “During 1979-80, silver climbed from $6 to $49 an ounce before plunging by over 90 percent. In 2011, prices peaked close to $48 and subsequently declined by more than 75 percent,” he said according to media reports.
Jigar Trivedi, senior research analyst at Reliance Securities, indicated that ₹2.4 lakh per kilogram emerges as important near-term support. However, he acknowledged that sharp volatility will characterize the market going forward. Past cycles suggest silver prices can correct 50 percent or more once upward momentum fades.
The correction demonstrates the risks of chasing momentum in commodity markets. Traders must prepare for continued volatility as silver adjusts from extreme overbought levels to more sustainable valuations.
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