Silver price crashes Rs 21,000 in an hour as overheated rally cools after breaching Rs 2.5 lakh/kg

MCX silver March futures crashed by Rs 21,000 per kg to an intraday low of Rs 2,33,120 within just an hour during the afternoon session, as traders booked profits after geopolitical tailwinds eased. The cooling of safe-haven demand came after prices had surged to an all-time high of Rs 2,54,174 earlier in the day.

In the international market, silver prices briefly climbed above the $80-per-ounce mark for the first time in volatile trading on Monday, but later fell below the $75 level amid profit-taking and reports of seemingly productive talks between US President Donald Trump and Ukrainian President Volodymyr Zelensky on a potential peace deal.

Trump said on Sunday that he and Zelensky were “getting a lot closer, maybe very close” to an agreement to end the war in Ukraine.

Silver has gained 181% year-to-date, outshining gold, driven by its designation as a critical US mineral, supply constraints, and low inventories amid rising industrial and investment demand.

Today's crash in silver is part of a broader profit booking across the bullion complex, as easing geopolitical tensions reduce safe-haven demand. Another reason for the selling pressure is a margin hike by the Chicago Mercantile Exchange (CME), which operates major derivatives exchanges such as CME, COMEX, CBOT and NYMEX, with effect from today.

The exchange has raised the initial margin requirement for the March 2026 silver futures contract to approximately $25,000, up from $20,000 earlier this month.

Jigar Trivedi, Senior Research Analyst at Reliance Securities, said overall the trend is positive yet volatile, and that Rs 2.4 lakh is a near-term support for silver.

US-based financial services firm BTIG has warned that precious metals have gone "parabolic". "Parabolas only end one way, with an equal and opposite downside reaction. They do not correct through time," it said.

On the technical charts, silver prices were trading 89% above the 200-DMA. “Outside of the ‘Hunt Brothers’ squeeze in 1979, even when silver was 60% above its 200-DMA, it has been meaningfully lower 20, 30, and 40 days later. While the fundamental story might be different this time, the 174% YTD gain has likely priced in much of that good news,” it said.

Silver was up over 10% on Friday, one of its largest single-day gains ever. The last time it gained 10% while hitting a multi-month high was in 1987, which marked the peak before it fell 25% over the following weeks, BTIG analyst Jonathan Krinsky recalled.

Manish Banthia, CIO of Fixed Income at ICICI Prudential Mutual Fund, said history suggests that such spectacular rises in silver rarely end gently.

"History provides sobering lessons. In 1979-80, silver surged from $6 to $49 an ounce before collapsing by more than 90%. In 2011, prices peaked near $48 and then fell by over 75% in subsequent years. In each case, silver had already multiplied several times before the decline began. Since the pandemic lows, prices have risen more than sixfold. Over the past year alone, they have almost tripled," he said.

Past cycles suggest that once momentum breaks, silver can fall sharply-often by 50% or more.