Silver Crashes ₹8,000 from Record High on MCX Amid Profit Booking and Fed Uncertainty

Silver prices experienced dramatic volatility on January 7, with MCX futures crashing over ₹8,000 per kilogram from an intraday record high as profit booking intensified ahead of key US economic data and Federal Reserve decisions. The March expiry futures dropped over 3% to ₹2,51,720 per kilogram after touching a fresh record of ₹2,59,692 per kilogram earlier in the session.

Intraday Volatility and Record Movements

The silver market witnessed unprecedented swings during the trading session:

Parameter:	Details
Record High:	₹2,59,692/kg (intraday)
Closing Price:	₹2,51,720/kg
Intraday Crash:	₹8,000/kg
Daily Decline:	Over 3%
Previous Session Gain:	₹13,167 (5.35%)

Spot silver also declined 2.30% to $79.40 per ounce, retreating from its all-time high of $83.62 hit on December 29. Despite the recent pullback, silver recorded its strongest annual performance, soaring over 147% amid rising industrial and investor appetite.

Market Drivers and Fed Outlook

The sharp decline came as the US dollar hovered near a more than two-week high, making greenback-priced metals more expensive for other currency holders. Federal Reserve officials remain divided on monetary policy direction, with Governor Stephen Miran advocating for aggressive rate cuts while Richmond Fed President Thomas Barkin emphasized data-dependent "finely tuned" adjustments.

Kaynat Chainwala, AVP Commodity Research at Kotak Securities, noted that "December FOMC minutes suggest officials remain divided on timing and scale of rate cuts." Wall Street is currently pricing in two benchmark interest rate cuts for the year, with investors closely watching ADP employment data and Friday's non-farm payroll report for monetary policy clues.

ETF Performance and Technical Outlook

Silver ETFs Performance:	Status
SBI Silver ETF:	Marginal gains
Axis Silver ETF:	Marginal gains
HDFC Silver ETF:	Marginal gains
ICICI Prudential Silver ETF:	Marginal gains
Motilal Oswal Silver ETF:	Marginal gains

Despite the volatility, market experts maintain a bullish long-term outlook. Peter McGuire, CEO of Trading.com Australia, expects silver to reach $90-95 by month-end with potential to approach $100 in the first quarter. However, he warned of sharp pullbacks of 6-8% in single trading sessions before renewed upward momentum.

Geopolitical Factors and Supply Dynamics

Chainwala highlighted that "Silver's surge was buoyed further by China's silver export controls and Trump's threats to resource-rich nations like Greenland, Cuba, and Mexico following strikes on Venezuela, underscoring intensifying competition for critical resources." The risk premium from US-Venezuela tensions has enhanced the safe-haven appeal of precious metals.

The underlying fundamentals remain supportive with structural supply-demand imbalances, constrained mine output, and rising industrial usage from technology and renewable energy sectors continuing to drive long-term demand for the white metal.

Silver achieved a remarkable milestone this week, briefly overtaking Nvidia to claim the position as the world's second-largest asset by market capitalisation. The white metal's meteoric rally pushed its market value to $4.57 trillion, edging past the AI chipmaker's $4.559 trillion valuation, though prices later eased to $79 per ounce.

Market Capitalisation Rankings

The brief overtaking highlighted silver's extraordinary surge, positioning it among the world's most valuable assets. The hierarchy at the time of the milestone demonstrates the scale of silver's achievement:

Asset:	Market Value
Gold:	$31.30 trillion
Silver:	$4.57 trillion
Nvidia:	$4.559 trillion
Apple:	$3.89 trillion
Alphabet:	$3.79 trillion

Silver's ascent is particularly noteworthy as it surpassed Nvidia, widely regarded as the poster child of the artificial intelligence boom, while outperforming nearly every major asset class in 2025.

Industrial Demand Drives Silver's Rally

Silver's surge stems from its indispensable role across multiple high-growth sectors. The metal serves as a critical component in electric vehicles, solar panels, electronics, and AI data centers. Government acceleration of energy transitions and rapid expansion of data infrastructure have created robust and largely unavoidable demand patterns.

The market faces its fifth consecutive year of supply deficits, with mining output consistently lagging behind consumption levels. Above-ground inventories have fallen to near historic lows, creating additional upward pressure on prices. Lower interest rates have further enhanced the appeal of non-yielding assets like silver, with three U.S. Federal Reserve rate cuts fueling expectations for additional monetary easing in 2026.

Geopolitical and Trade Factors

A weaker dollar and various geopolitical developments have contributed to silver's haven appeal. U.S. actions in Venezuela and Nigeria have created additional flashpoints that support precious metals demand. Meanwhile, a U.S. Commerce Department probe into critical mineral imports has raised prospects of tariffs or trade restrictions on silver, injecting fresh uncertainty into already strained supply chains.

Market Structure Vulnerabilities

Unlike gold, which benefits from deep liquidity and lending pools estimated at $700 billion in London, silver lacks comparable market buffers. This structural fragility became evident during October's historic supply squeeze. While London vaults have experienced some inflows since then, shortages persist in other global markets.

In China, inventories connected to the Shanghai Futures Exchange dropped to their lowest levels since 2015. Much of the world's readily available silver now sits in New York warehouses, as traders await clarity on U.S. trade policy developments. This concentration has created what market observers describe as a global game of musical chairs, with insufficient metal available to meet widespread buyer demand.