Silver prices declined by Rs 1,832 to Rs 2.70 lakh per kilogram in futures trade on Monday as a rally in crude oil rates amplified inflation concerns and the strength of the US dollar in overseas markets weighed on investors’ sentiment.
On the Multi Commodity Exchange, the white metal for July delivery depreciated by Rs 1,832, or nearly 1 per cent, to Rs 2,70,054 per kilogram, extending losses for the third straight session.
Analysts said the surge in crude oil prices has fuelled inflation concerns globally, strengthening expectations that major global central banks may maintain a tighter monetary policy stance for longer, which in turn pressured precious metals.
“Silver witnessed sharper selling pressure on Monday in line with global prices near the USD 75 per ounce range, as industrial demand concerns and profit booking weighed on sentiment,” Gaurav Garg, Research Analyst at Lemonn Markets Desk, said.
Crude oil prices surged above USD 111 per barrel, driven by escalating geopolitical tensions in the Middle East and rising fears of supply disruptions, he added.
Manav Modi, Commodities Analyst, Motilal Oswal Financial Services Ltd, said bullion market witnessed a major policy shake-up after the government’s latest curbs on silver imports were shifted from “Free” to “Restricted,” tightening supply conditions and creating sharp volatility in MCX prices while weakening physical demand sentiment.
The government, on May 13, hiked import duty on precious metals – gold, and silver – from 6 per cent to 15 per cent. The effective duty (including 3 per cent IGST) is over 18 per cent.
It was hiked to control the outflow of forex by curbing non-essential imports.
In the international markets, Comex silver futures for the July contract fell nearly 3 per cent to USD 75.48 per ounce in New York.
According to analysts, investor sentiment also remained cautious after the United Arab Emirates blamed a fire near its nuclear facility on a drone allegedly launched by Iran or its proxies, raising fears of further escalation in the region.
US President Donald Trump also warned that “the clock is ticking” for Tehran as negotiations aimed at ending the conflict remained stalled.
On the domestic front, analysts said tighter restrictions on silver imports and higher duties on precious metals have increased volatility.
Brokerage firm Kotak Neo (formerly Kotak Securities) said persistent supply tightness, geopolitical risks and resilience industrial demand continue to support for silver despite near-term weakness.