Silver prices on the Multi Commodity Exchange (MCX) have experienced significant volatility, declining by approximately ₹18,000 per kg over the past two trading sessions. The sharp correction follows easing geopolitical tensions and renewed optimism surrounding potential US-India trade relations, which has reduced safe-haven demand for the precious metal.

Price Movement and Market Performance

The March 5, 2026 silver futures contract on MCX registered a substantial decline, falling nearly ₹13,000 to close at ₹3,05,753 per kg, marking approximately a 4% drop. This correction comes after the white metal reached record highs, triggering a wave of profit-taking among investors.

Market Drivers and Sentiment

The price decline has been attributed to multiple factors affecting market sentiment. Easing geopolitical tensions involving Denmark-owned Greenland and the United States have reduced the appeal of silver as a safe-haven asset. Additionally, comments by US President Donald Trump at the World Economic Forum in Davos regarding potential trade deals have further cooled bullish momentum in the precious metals sector.

Trump's statement that "We are going to have a good deal" in reference to US-India trade relations has contributed to improved market sentiment, reducing demand for traditional safe-haven assets like silver.

Technical Analysis and Price Outlook

According to Ponmudi R, CEO of Enrich Money, MCX silver remains within a strong bullish channel despite the recent correction. The analyst notes that consistent buying emerges on dips, with the metal continuing to outperform as a high-beta precious metal play.

For COMEX silver, prices are trading around $92-$93 after recently touching record highs above $95.80. The metal remains above its short and medium-term averages, reflecting strong buyer dominance despite the recent volatility.

Expert Recommendations and Market Volatility

Manoj Kumar Jain of Prithvi Finmart has highlighted heightened volatility across precious metals markets. He recommends avoiding fresh positions in the current session and waiting for market stability to return.

Industrial Demand and Long-term Outlook

Despite the recent correction, analysts point to robust industrial demand supporting silver's long-term prospects. Key sectors driving demand include solar energy, electric vehicles, artificial intelligence, and electronics manufacturing. This industrial demand, combined with tightening global supply and safe-haven flows, continues to underpin the metal's structural strength.

Justin Khoo, senior market analyst at VT Markets, suggests that investors focus on strategic positioning rather than chasing record highs. He recommends tactical profit-taking near peaks for short-term traders while maintaining that silver remains a compelling hedge against inflation and market uncertainty for long-term investors. Overall, experts advocate buying on meaningful dips and holding core positions while maintaining balanced allocations with disciplined risk management.

Silver markets witnessed significant volatility on January 22, with silver ETFs experiencing dramatic declines that far exceeded the drop in underlying futures contracts. While MCX silver futures fell 4%, major silver ETFs crashed between 20-24%, highlighting a stark divergence in performance.

MCX Silver Futures Decline on Eased Tensions

Silver futures on the Multi-Commodity Exchange dropped 4% to ₹305,753 per kilogram on Thursday, driven by reduced geopolitical tensions and US dollar strength. The decline followed US President Trump's decision to back down from new tariff threats and proposals to annex Greenland by force, which dampened safe-haven demand for precious metals. From its all-time high, MCX silver rates are now lower by almost ₹30,000.

Silver ETFs Experience Severe Correction

The impact on silver ETFs was far more pronounced than the underlying futures market:

Understanding the Performance Divergence

The sharper decline in silver ETFs compared to MCX silver futures reflects the unwinding of speculative premiums rather than fundamental weakness. According to Harshal Dasani, Business Head at INVasset PMS, Indian silver had moved into speculative premium territory ahead of the Budget, driven by expectations of import duty changes.

Over recent sessions, MCX silver had significantly outperformed COMEX due to Budget-related expectations. At its peak, Indian silver traded near $107 per ounce, representing an unusually wide premium of almost $13 above the COMEX price of around $94. This premium was largely sentiment-driven rather than based on physical market tightness.

ETF Premium Dynamics and Market Correction

Despite the sharp declines, most silver ETFs continue trading at premiums to their net asset values. These premiums had built up due to:

• Rumors of import duty hikes in the upcoming Union Budget
• Speculative buying by investors
• Expectation-driven sentiment rather than physical market fundamentals

Dasani explained that silver ETFs, priced off domestic spot benchmarks while reflecting investor flows and arbitrage pressures, tend to react faster during premium collapse phases. When retail investors rush to book profits, ETF units face additional selling pressure even as MCX futures stabilize.

Investment Outlook and Strategic Considerations

Justin Khoo, Senior Market Analyst - APAC at VT Market, views the ETF correction as profit-taking and risk-rebalancing amid rallying equity markets. He notes that structural drivers including central bank accumulation, long-term demand, and inflation hedging remain intact.

For investors, Khoo suggests that disciplined participants may view this correction as a strategic accumulation opportunity, while cautioning against aggressive short-term speculation given ongoing volatility. The correction appears technical rather than fundamental, with spot gold and silver maintaining historically elevated levels.