Silver Price Decline: Once Dubbed the ‘New Gold’, What Led to the Downturn?
Silver prices have experienced a dramatic correction, dropping over 50% from their peak in late January. The decline has left investors questioning whether the bull run has ended or merely paused. In the international markets, COMEX Silver has fallen 37% since the onset of the US-Iran war and is down 52% from its all-time high. In domestic markets, MCX Silver has corrected 20% since the war and 46% from its peak.
In contrast, gold prices have not seen as sharp a decline. COMEX Gold has decreased 15% since the war and 27% from its all-time high, while MCX Gold is down 12% since the conflict began and 22% from its peak. The stark difference in price corrections between silver and gold has raised questions about the future of silver prices amid ongoing geopolitical tensions.
Reasons Behind Silver’s Decline
Silver’s remarkable rally, which saw prices surge nearly 350% from around Rs 95,000 to Rs 4,00,000 between 2025 and early 2026, has been followed by aggressive profit booking. Experts attribute the sharp correction to several factors, including margin hikes aimed at curbing speculative activity. Pranav Mer, Senior Vice President at JM Financial Services, noted that the rally ended in January 2026, leading to a reversal in prices after a failed recovery attempt in March.
The onset of the US-Iran war has also shifted demand towards the US dollar and Treasuries, negatively impacting silver. Jateen Trivedi, VP Research Analyst at LKP Securities, explained that the initial decline was largely due to profit booking, while the post-war correction was influenced by higher interest rate expectations and weaker investor participation. Maneesh Sharma, a commodity expert, highlighted that speculative capital played a significant role in silver’s rise and subsequent fall, exacerbating the price drop compared to gold.
Current Market Sentiment and Future Outlook
Experts are divided on whether the bull run in silver is over. Some predict further corrections, while others believe the demand fundamentals remain strong. Maneesh Sharma indicated that while silver prices have dropped significantly, a short-term bounce back to $61–63 per ounce is possible. This could translate to levels of Rs 2,32,500 – 2,34,000 per kg in the MCX September futures contract.
Divya Mandaliya, a Commodity Research Analyst at Anand Rathi, views the current correction as a natural pause rather than an end to the bull market. She emphasized that sharp corrections often follow rapid price increases, and the recent decline reflects profit booking rather than a fundamental shift in demand. Jateen Trivedi echoed this sentiment, stating that long-term demand from sectors like solar energy and electronics supports the bull case for silver.
Pranav Mer, however, anticipates further downside, expecting silver prices to drop below $50 in the coming months. He advised against fresh long-term buying at current levels but suggested that those looking to accumulate could consider a monthly SIP approach.
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