Why Did Silver Futures Plummet 4.6% After This Year's Record Rally?
Synopsis
On the last trading day of the year, silver futures experienced a significant drop of 4.6% after a remarkable rally. Analysts attribute this decline to profit-taking and ongoing geopolitical tensions affecting the precious metals market.
Key Takeaways
Silver futures dropped by 4.63% on the last trading day of the year.
Gold prices also fell, reflecting market volatility.
Geopolitical tensions contributed to fluctuations in precious metals.
Silver has shown a 135% year-over-year increase.
Analysts highlight tight supply-demand fundamentals as a key factor.
Mumbai, Dec 31 (NationPress) Precious metals, particularly silver, paused on the last trading day of the year, following a remarkable ascent to unprecedented heights, which was subsequently met with significant profit-taking.
Silver futures for March 2026 on MCX fell by 4.63% to Rs 2,39,395 per kg, while gold futures for February 2026 decreased by 0.51% to Rs 1,35,973 per 10 grams in the morning session.
Market volatility remained heightened due to geopolitical challenges, including US attacks on Venezuelan dock facilities and Chinese naval maneuvers, which had earlier spurred safe-haven demand.
This decline followed substantial gains throughout 2025, with silver experiencing a 24% rise in December and a striking 135% year-over-year increase. Analysts attribute this to tight supply-demand dynamics and strong safe-haven investments.
Domestic spot gold prices have soared by over 76% year-to-date, with international gold prices climbing over 70% in 2025, poised for their most robust annual performance since 1979.
“Gold and silver prices saw significant fluctuations on Tuesday, rebounding from intraday lows as escalating geopolitical tensions increased safe-haven appeal. The peace talks between Russia and Ukraine faltered after Russia accused Ukraine of a drone strike on the President’s residence,” stated Rahul Kalantri, VP Commodities at Mehta Equities Ltd.
In addition, US strikes on Venezuela and Chinese naval operations intensified tensions with Taiwan, which further supported precious metals. However, the gains were limited following the Federal Reserve's meeting minutes that dampened expectations for aggressive rate cuts in the upcoming year, Kalantri noted.
Silver's support levels are at Rs 2,45,150 to Rs 2,42,780, while resistance is observed between Rs 2,54,810 and Rs 2,56,970.
Factors such as central bank buying, anticipated cuts in US Fed rates, worries regarding US tariffs, geopolitical issues, and robust investment inflows into gold and silver ETFs have significantly influenced gold and silver prices this year.
A recent report from Motilal Oswal Financial Services Ltd. highlighted persistent inventory drawdowns across major global hubs, diminishing arbitrage opportunities between Shanghai and COMEX, and ongoing delivery pressures that have revealed the limited availability of deliverable silver.
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Point of View
It's crucial to observe the substantial fluctuations in the precious metals market, particularly silver, which has shown remarkable resilience throughout the year. The recent drop, attributed to profit-taking amid geopolitical tensions, underscores the volatile nature of this sector. Our commitment remains to provide accurate and timely updates to our readers, ensuring they are informed about the factors impacting their financial decisions.
NationPress
11 May 2026
Frequently Asked Questions
What caused the drop in silver futures?
The drop in silver futures was primarily due to profit-taking after a record rally and ongoing geopolitical tensions affecting market stability.
How much did silver futures decrease?
Silver futures for March 2026 dropped by 4.63% to Rs 2,39,395 per kg.
What are the current support and resistance levels for silver?
Silver has support at Rs 2,45,150 to Rs 2,42,780 and resistance at Rs 2,54,810 to Rs 2,56,970 .
How did geopolitical tensions affect precious metals?
Geopolitical tensions, including US strikes on Venezuela and military exercises by China, enhanced safe-haven demand for precious metals like gold and silver.
What was the annual performance of gold in 2025?
Domestic spot gold prices surged over 76% year-to-date, marking one of the strongest annual performances since 1979.
