New Delhi: Gold and silver prices witnessed a sharp fall across the country, delivering a major shock to the bullion market. On the Multi Commodity Exchange (MCX), silver plunged by ₹1.10 lakh in a single day to ₹2.91 lakh per kg. Just a day earlier, silver was trading at around ₹4 lakh per kg, but on Friday it slipped below the ₹3 lakh mark on the exchange, recording a steep decline of nearly 27%.
In the physical bullion market, silver became cheaper by about ₹40,000 per kg. According to the India Bullion and Jewellers Association (IBJA), silver is now priced at ₹3.39 lakh per kg.
Gold prices also saw a significant fall. In the bullion market, 24-carat gold was quoted at ₹1,65,795 per 10 grams. On the MCX, gold dropped by around ₹20,000 per 10 grams to ₹1.49 lakh, marking a decline of nearly 12% in a single session. On January 29, gold was trading at ₹1.69 lakh per 10 grams.
Gold and silver prices had recently touched record highs, prompting large-scale bookings by investors. Alongside institutional buying, retail demand for silver also rose sharply, with buyers purchasing according to their capacity. In several places, silver shortages were reported, further fuelling buying interest and pushing prices to peak levels. However, this sharp rally has now been followed by a sudden and heavy correction.
Market participants attribute the steep fall largely to a recent increase in margin money requirements. In the commodity market, traders do not need to pay the full value of a contract and can book metals by depositing a smaller amount known as margin money. Recently, margins on gold were raised from 6% to 8%, while margins on silver were increased from 11% to 15%.
The higher margin requirements increased pressure on the market. Many investors who had already taken positions were asked by exchanges to deposit additional funds. Those unable to do so were forced to sell their holdings. As a large number of investors sold gold and silver simultaneously, prices fell sharply in a short span of time.
