Record drop in silver prices ahead of Diwali! Value falls from a high of ₹3.80 lakh to ₹1.8 lakh..

Silver Price Drop Ahead of Diwali: Significant news is emerging from the bullion market just ahead of the festive season and Diwali. In the international market, the price of silver has plummeted by 4.72% to around $49.68 per ounce—its lowest level in 11 months (since November 2025). Meanwhile, US silver futures are also trading 4.97% lower at $49.77 per ounce.

This global downturn has clearly impacted the Indian bullion market, where spot silver prices fell by 5.70% (a drop of over ₹11,000) in a single day, settling at ₹1,82,442 per kilogram. On the MCX, silver for December 4 delivery slipped by 4.52% to close at ₹1,80,885 per kg.

Why did silver prices crash?

According to Nirpendra Yadav, Senior Research Analyst at Bonanza Portfolio, there are three primary reasons behind this sharp decline in silver:

Fears of rising interest rates in the US: Stronger-than-expected economic growth and persistent inflation in the US have fueled speculation that the Federal Reserve may raise interest rates in December.

Strengthening of the dollar and bond yields: Expectations of higher interest rates have bolstered both the dollar and bond yields, reducing the appeal of non-interest-bearing precious metals.

Concerns regarding industrial demand: Unlike gold, silver is significantly influenced by industrial demand. Investors remain concerned about the sustainability of demand at these high price levels. Significant Pressure on Silver ETFs

Silver ETFs have not been spared from this major market downturn; funds in this category have delivered negative returns over the past six months:

Zerodha Silver ETF: -18.84% (steepest decline)
DSP Silver ETF: -18.66%
HDFC Silver ETF: -18.59%
Crucial $50 Level Breached: Will Silver Fall Further?

Experts believe that the breach of the psychological level of $50 per ounce signals a deterioration in market sentiment for the near term.

According to Nirpendra Yadav, "A drop in prices below $50 could trigger profit-booking and technical selling. The $50 mark will now serve as a critical threshold. If silver remains below this level, further declines could follow. For market stability, prices must recover back above $50."

Should You 'Buy the Dip' This Diwali? Advice for Investors

Market experts are adopting a cautious stance regarding purchases during the Diwali and Dhanteras period. Analysts advise investors against deploying their entire capital solely because prices have fallen.

Before making any investment decisions, wait for prices to stabilize and for signs that buying interest has returned. Moving forward, the trajectory of silver prices will be influenced by uncertainties surrounding the US elections, US-Iran tensions, the Dollar Index (currently at 101.66), as well as US unemployment and non-farm payroll data.

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