Silver Prices Plummet on MCX Amid Global Market Volatility Following Trump's Address

Global Markets Experience Volatility Amid Geopolitical Tensions

The Indian commodity market witnessed a decline in silver prices on Thursday, April 2, as US President Donald Trump's remarks regarding Iran heightened geopolitical tensions. The MCX silver futures set for May 5 plummeted by 7.8%, or ₹19,001, to reach an intraday low of ₹224,500. This represents a 4.48% decline in the metal's price. The price of silver futures also peaked at ₹242,800, which was 0.28% lower than the previous day's closing price.

Global Market Reaction

The price of spot silver in the global market fell by USD 5.49, representing a decline of 7.32%, to reach USD 69.57 per ounce on Thursday, April 2. Analysts predict that volatility will persist, advising investors to exercise caution and take profits during price rallies.

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Impact of Trump's Speech

Donald Trump's recent national address caused a significant reaction in silver prices. His assertion that the US would hit Iran "extremely hard over the next two or three weeks" indicated a prolonged conflict rather than steps toward de-escalation. Experts believe that the markets had partially accounted for a ceasefire or a diplomatic agreement, and this change in rhetoric heightened concerns about an extended war and the risks of stagflation.

Macro Economic Factors

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The address strengthened the belief that US interest rates may stay elevated for an extended period, resulting in an increase in the US dollar and real bond yields. This scenario is generally unfavorable for precious metals. Since silver, like gold, is an asset that does not earn interest and is priced in dollars, a stronger dollar makes it costlier for international buyers, while higher yields decrease the attractiveness of holding these assets in comparison to interest-generating instruments.

Technical Outlook

Jigar Trivedi, Senior Research Analyst at IndusInd Securities, predicts that the MCX Silver May futures is likely to drop to ₹220,000 per kg. Trivedi recommends going short on every bounce, advising investors to avoid starting new long positions at elevated price levels.