Silver prices experienced a dramatic correction this week, with MCX futures plunging approximately ₹22,000 in just three days. The precious metal, which had delivered over 160% returns in 2024, faced intense selling pressure as traders engaged in widespread profit booking following a spectacular rally that exceeded most bullish expectations.

Sharp Price Decline Across Platforms

The correction was swift and severe across multiple platforms. On the commodity exchange MCX, silver prices crashed from Monday's peak to significant lows, while the morning session opened with a brutal 6% slide. The selloff extended beyond futures markets, with exchange-traded funds bearing the brunt of the decline.

Key Factors Behind the Correction

Analysts identified several structural and technical factors that contributed to the sharp decline. CME Group's decision to raise margin requirements on silver futures emerged as a primary catalyst, forcing leveraged traders into hasty exits as positions became technically overstretched.

Ajay Kedia of Kedia Commodities explained the structural trigger: "CME has raised the margin on both gold and silver. Because of that, we saw some profit booking triggered yesterday." He noted that the correction was technically overdue, stating: "Technically, the market was severely overbought. We were anticipating this kind of profit booking."

Holiday-thinned liquidity amplified the price swings, with volumes remaining depressed through the year-end period. "Volumes are very low as of now because of the holiday mood. Until January 5, we can expect this type of volatility in the market," Kedia observed.

Market Analysis and Outlook

Ponmudi R, CEO of Enrich Money, highlighted multiple contributing factors: "The correction has been driven primarily by CME margin hikes, forced deleveraging, year-end tax harvesting, and thin liquidity conditions, keeping near-term sentiment cautious despite the intact broader trend."

Despite the brutal correction, market veterans maintain that the broader bullish structure remains intact. Ponmudi emphasized: "Such pullbacks are typical of strong bull markets and often serve as healthy resets by flushing out excess leverage. As long as key support levels hold, the medium- to long-term outlook remains constructive."

Kedia revealed that silver's meteoric rise had exceeded bullish expectations: "For silver, frankly we were expecting the $75 to $80 level in the next couple of years but that target has been achieved in a single year."

Technical Levels and Support Factors

Analysts provided specific technical levels for traders to monitor. Rahul Kalantri, VP Commodities at Mehta Equities, outlined key price ranges for both international and domestic markets.

Ponmudi identified critical technical markers: "As long as $70.40 holds, the trend remains corrective rather than bearish. A break below $70.40 could trigger a short-term reversal toward $65, while a decisive move above $78.67 would invalidate the bearish setup."

Jigar Trivedi, Senior Research Analyst at Reliance Securities, emphasized structural support factors: "Despite near-term volatility, silver continues to find support from structural supply constraints and strong industrial demand, particularly from solar, electronics, and data center infrastructure."

Market Evolution and Future Expectations

Ponmudi provided context on how dramatically silver markets have evolved: "During the 2015-2019-2020 period, silver's domestic base price zone was near ₹33,000 per kg. Today, silver is operating in a markedly different market regime, characterised by deep global participation via ETFs, derivatives, algorithmic trading, and instant market access."

For MCX Silver futures, currently trading near ₹2,37,000–₹2,38,000, analysts see potential for recovery. Ponmudi noted that a sustained rebound above ₹2,36,000 could potentially trigger fresh upside toward ₹2,45,000–₹2,60,000 over the medium term.

The consensus among analysts suggests this week's correction represents forced profit-booking rather than a fundamental breakdown in the underlying trend, with declines expected to attract buying interest rather than signal a complete reversal.

Gold and silver delivered extraordinary performance in 2025, with both precious metals reaching multiple record highs across global and domestic markets. The exceptional rally has been driven by a combination of macroeconomic factors, geopolitical tensions, and structural supply-demand dynamics that continue to support bullish projections for 2026.

Stellar 2025 Performance Across Markets

Both metals achieved remarkable gains throughout 2025, significantly outpacing traditional asset classes and reflecting broader shifts in global investment patterns.

Globally, gold climbed nearly 70%, breaking the $4,500 per ounce mark after surpassing $4,000 in October, while silver skyrocketed over 128%, topping $80 per ounce. In India, MCX gold futures surged from around ₹75,000 to nearly ₹1,39,000–₹1,40,000 per 10 grams, representing a rise of nearly 78%, while silver futures jumped approximately 144%, approaching the ₹2.50 lakh per kg mark.

Key Drivers Behind the 2025 Rally

The surge in precious metals prices has been supported by multiple macroeconomic and structural factors creating a favorable environment for hard assets.

Primary Market Drivers:

• Persistent expectations of U.S. Federal Reserve rate cuts lowering real yields
• Softening U.S. dollar making gold more affordable internationally
• Heightened geopolitical tensions from Middle East conflicts to Venezuelan oil tanker blockades
• Sustained central bank purchases and record ETF inflows
• Structural supply deficit in silver for fifth consecutive year
• Surging industrial demand from solar, EVs, electronics, and AI infrastructure

According to Renisha Chainani, Head of Research at Augmont, "After an exceptional rally in 2025, gold and silver remain structurally well supported, even as prices enter a phase of consolidation." Silver particularly benefited from its official listing as a U.S. critical mineral and China's strict export controls, intensifying the squeeze on available stocks.

Major Bank Projections for 2026

Major financial institutions maintain bullish outlooks for both metals in 2026, with ambitious price targets reflecting continued structural support.

Survey data shows nearly 70% of institutional investors expect gold to rise, with 36% predicting it will breach $5,000 by the end of 2026. Silver is positioned to test the $100 per ounce level, driven by technical breakouts, structural supply deficits, and surging green-tech industrial demand.

Chainani stated that gold "could continue to trade with an upward bias, with year-end targets around $5,000 and $5,500," while silver "may test the $95–$100 range if supportive macro and supply conditions persist."

Indian Market Outlook and Investment Strategy

With global bullish momentum carrying into 2026, India's bullion market is positioned for continued strength, especially as rupee weakness adds another support layer.

Mahendra Luniya, Chairman of Vighnaharta Gold, projects that "Gold could reach around ₹3.42 lakh per tola before 2030," with the first target for 2026 around ₹1.78-1.82 lakh per tola. Physical demand is expected to remain robust due to strong seasonal purchases and growing trend of bullion as wealth-preservation asset.

For investors, experts recommend a balanced approach: booking partial profits to lock in gains while maintaining core holdings as hedge against volatility and inflation. Preferred investment modes include physical gold and silver for long-term wealth preservation, ETFs and mutual funds for liquidity, and systematic investment plans to smooth price fluctuations.