Silver Defies Slump: Silver prices snapped their two-day losing streak in domestic and international markets to log a sharp rebound on the charts, defying the expected Street consensus of a near-term price correction after geopolitical risk premium lifted the safe haven appeal of the white metal.
Commodity investors weighed the ongoing geopolitical risks and trade deal negotiations between India and US against the ongoing rebalancing of commodity indexes and a stronger US dollar. Market participants have turned focus to a crucial US non-farm payrolls report due later in the day.
Silver Rebounds: MCX in green, Spot up 6% on week
Spot silver gained 1.4% to $77.96 per ounce and was on track to log a more than 7% weekly rise. The US dollar climbed to a one-month high as markets braced for an approaching Supreme Court decision on President Donald Trump’s use of emergency tariff powers. A stronger dollar makes greenback-priced bullion more expensive for other currency holders.
Back home, silver futures hit Rs 2.50 lakh per kilogram-mark on the multi commodity exchange (MCX). MCX silver futures, due for a March 5 expiry, opened at Rs 2,44,455 per kg against a previous close of Rs 2,43,324 to gain 3% and hit an intraday high of Rs 2,50, 250 per kg during the session so far. The contracts hit an intraday low of Rs 2 43,670 per kg earlier.
Silver Defies Slump: Top Five Factors That Drove White Metal
The precious metal logged a dramatic week after log two straight sessions of massive intraday losses to a sharp rebound at a time when analysts and global brokerages had expected a continued slump in prices and a higher liquidity impact over gold. However, silver defied the bearish expectations to truly emerge as a ‘devil’s volatile’ metal against a slew of market triggers.
From the commodity index rebalancing to supportive geopolitical risk premium, Here are five key factors that drove the white metal this week:
1. Commodity index rebalancing
The annual Bloomberg Commodity Index rebalancing, designed to keep the index aligned with the current state of the global commodity market, begins this week. The Bloomberg Commodity Index target weight is being reduced from 9.6% to 3.9%. Citi Research pegged ~$6.8–6.9 billion of rebalancing outflows for silver between Jan. 8–14 index reshuffle window.
The private bank predicted silver to log the largest liquidity impact from rebalancing outflows. Domestic brokerage Kotak Securities also said that the white metal remains ”particularly exposed amid elevated volatility”.
2. Stronger US dollar
The US dollar has displayed strength for the last three sessions to hit a monthly high after investors assessed mixed economic data ahead of Friday’s nonfarm payrolls report. The stability and ongoing strength of the US currency has limited the upside momentum for the precious metal dimming the safe haven appeal of both gold and silver for investors.
3. Supreme Court ruling on Trump tariffs
US President Donald Trump is considering to impose steep tariffs, as high as 500%, on countries that continue to buy Russian oil. Senator Lindsey Graham said the sanctions would give Trump leverage over major buyers such as China, India, and Brazil, pressuring them to halt purchases of discounted Russian crude that helps finance the war in Ukraine.
Given the potential impact on key Russian energy customers, the move could escalate US–China trade tensions, supporting the safe-haven demand for gold and silver. However, investor attention remains fixated on a possible Supreme Court ruling on Trump tariffs expected later today.
”If the Supreme court rule against the tariffs, concerns over an intensifying trade war could ease, it may potentially limit a further upside fot gold and silver prices in the near term,” said Kaynat Chainwala, AVP Commodity Research, Kotak Securities.
4. Geopolitical risk premium
. Read more on Markets by NDTV Profit.