Silver Crashes ₹1.60 Lakh in 3 Days; Gold Also Slumps as Market Sees Sharp Correction
In a dramatic turn for investors, the bullion market witnessed a severe sell-off this week, with silver price crash becoming the headline story. The white metal has become a staggering ₹1.60 lakh cheaper per kilogram in just three trading sessions, sending shockwaves through the market.
As of February 2, silver futures nosedived by approximately 9%, or ₹23,000, in a single day, crashing to around ₹2.41 lakh per kg. Gold was not spared either, declining by about 6% (₹7,000) to reach near ₹1.40 lakh for 10 grams. This marks the third consecutive day of significant declines for both precious metals.
What’s Causing the Precious Metals Meltdown?
Market experts point to two immediate triggers for the sudden gold price drop today and the silver plunge.
1. Profit-Booking at Peak: After scaling record highs recently, prices had reached levels that prompted large-scale profit-taking by investors and institutional traders.
2. A Squeeze from Margin Hikes: A critical technical factor amplified the sell-off. Anuj Gupta, a SEBI-registered commodity expert, highlighted that the Chicago Mercantile Exchange (CME) increased margin requirements—the security deposit needed to hold a trading position.
“The margin on gold was raised from 6% to 8%, and for silver, it jumped sharply from 11% to 15%,” Gupta explained. This forced many traders who could not furnish the extra funds to liquidate their positions, creating a cascade of selling pressure.
A Look at the Bullion Market Rollercoaster
The current slump follows a historic drop just days prior. On January 30, in the spot market, silver had plummeted by ₹40,638 per kg, while gold fell by ₹9,545 per 10 grams, according to the India Bullion and Jewellers Association (IBJA).
Smart Buying Tips Amid Volatility
For buyers looking at physical jewellery or coins, market volatility underscores the need for caution. Here are two essential checks:
Buy Only Hallmarked Gold: Always purchase BIS (Bureau of Indian Standards) hallmarked jewellery. The hallmark certifies purity (like 22K or 18K).
Cross-Check Rates & Weight: Verify the day's exact gold and silver prices from official sources like the IBJA website and ensure correct weight at the jeweller.
How to Identify Real Silver:
Magnet Test: Genuine silver is not magnetic.
Ice Test: Ice melts unusually quickly on real silver.
Smell Test: Pure silver has no odour.
Cloth Test: Rubbing with a white cloth leaves a slight black mark on real silver.
The sharp correction in gold and silver prices serves as a reminder of the commodity market's inherent volatility. While presenting a potential entry point for some investors, it highlights the importance of understanding market mechanics and making informed, verified purchases, especially in physical form. Staying updated with credible bullion market news and expert analysis is key to navigating these shiny but turbulent assets.
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