Silver prices took a sharp hit on Thursday, leaving many investors surprised. On the Multi Commodity Exchange (MCX), silver slipped by more than Rs 4,000, falling Rs 4,153 to Rs 2,70,112 around 12:30 pm. Gold prices also edged lower, but the drop in silver was much steeper.
So, what is pulling prices down? Here are three key reasons behind the sudden fall.
One of the biggest reasons behind the weakness in silver is improving hopes of a possible peace deal between the US and Iran.
US President Donald Trump said on Wednesday that negotiations with Iran were in the final stages, although he also warned of further attacks if Tehran did not agree to a deal. At the same time, Iran warned against fresh aggression, keeping tensions alive.
Still, markets seem to be focusing on the possibility of diplomacy. When fears of conflict ease, investors often move away from safe-haven assets such as and silver, leading to pressure on prices.
Another reason is the fall in crude oil prices.
Oil, which had crossed $105 per barrel recently, corrected sharply by more than 6% in the previous session and is now trading near the $99–100 range.
Lower oil prices often reduce inflation worries. When inflation fears cool, demand for precious metals like silver and gold may weaken because investors see less need to hedge against rising prices.
However, oil still remains at elevated levels from a broader economic point of view and continues to be closely watched for its impact on inflation and business costs.
Experts say traders are still being careful as geopolitical tensions have not completely disappeared.
Ponmudi R, CEO of Enrich Money, said silver is currently trying to hold key levels after opening sharply lower. “MCX Silver opened with a sharp gap down and is currently holding above the Rs 2,72,000 mark. Immediate resistance is placed at Rs 2,75,000–Rs 2,76,000; a sustained move above this zone could help stabilise prices and trigger a recovery toward Rs 2,78,000–Rs 2,80,000. On the downside, a break below Rs 2,71,000 may drag prices back to Rs 2,68,000–Rs 2,67,000.”
He further added, “Overall, the near-term bias remains cautious, while direction continues to depend on safe-haven demand and evolving geopolitical developments.”
What about gold?
Gold prices also remained under pressure. At around 12:30 pm, MCX gold was priced at Rs 1,59,390, down Rs 616.
Ponmudi R said gold is also moving cautiously and needs stronger momentum to recover.
“MCX Gold opened with a mild gap down and is currently holding above the Rs 1,59,500 mark. Immediate resistance is placed at Rs 1,60,000–Rs 1,60,400; a sustained move above this zone could help strengthen momentum and push prices toward Rs 1,61,000. Overall, the near-term bias remains cautious and a decisive move above resistance levels remains crucial for improving momentum, while direction continues to depend on global risk sentiment,” he added.
What investors should watch now
For now, market sentiment remains cautiously optimistic. Easing crude oil prices and hopes around US-Iran talks are helping calm nerves.
But uncertainty is still high. Any setback in diplomatic talks or fresh geopolitical tensions could quickly change market direction and bring volatility back to gold and silver prices.