Mumbai: Silver prices came under heavy selling pressure on the Multi Commodity Exchange (MCX) on Monday, September 28, with the December futures contract falling more than Rs 7,000 per kg and slipping below the key Rs 2.28 lakh level. The decline came amid a broader sell-off in precious metals as rising crude oil prices, higher US Treasury yields and a stronger dollar weighed on market sentiment.

The December silver futures contract was trading at Rs 2,27,494 per kg around 12:36 pm, down Rs 7,202, or 3.07%, from its previous close of Rs 2,34,696. The move came after silver had opened lower and continued to face selling pressure through the session.

The fall in domestic silver prices reflects pressure across global precious-metal markets. Investors are assessing the impact of higher oil prices on inflation, while rising bond yields and expectations of tighter US monetary policy have reduced the appeal of non-interest-bearing assets such as silver and gold.

Silver price on MCX

The December silver futures contract remained under pressure throughout Monday’s trading session. At around 12:36 pm, the contract was quoted at Rs 2,27,494 per kg, representing a fall of Rs 7,202 from the previous close. The 3.07% decline pushed prices below the psychologically important Rs 2.28 lakh mark.

Other market data also showed the December contract trading sharply lower during the day. IIFL Capital data showed the contract had opened at Rs 2,32,300 per kg against a previous close of Rs 2,34,696 and was trading at Rs 2,32,300 earlier in the session before the decline deepened.

The volatility highlights how quickly silver prices can move when global macroeconomic factors change. Silver is influenced not only by investment demand but also by industrial consumption, making its price movements particularly sensitive to expectations surrounding economic growth, currencies, interest rates and commodity markets.

Why are silver prices falling?

A major factor behind Monday’s sell-off was the rise in crude oil prices. Higher oil prices can add to inflationary pressure, raising concerns that central banks, particularly the US Federal Reserve, may need to keep interest rates higher for longer or consider additional tightening.

Higher interest rates and Treasury yields can weigh on precious metals because assets such as silver and gold do not generate regular interest income. When yields on interest-bearing investments rise, the relative appeal of holding non-yielding metals can decline.

The US dollar has also been a key factor. A stronger dollar generally makes dollar-denominated commodities more expensive for buyers using other currencies, potentially putting additional pressure on demand.

Market reports on Monday pointed to the combination of crude oil prices, US bond yields and the dollar as important drivers behind the decline in both gold and silver.

Industrial demand offers some support

Despite the sharp decline, silver continues to have an important industrial-demand component. The metal is widely used in applications including electronics, solar technology and other industrial products.

According to Ponmudi R, CEO of Enrich Money, the sharp decline despite robust industrial-demand support suggests that broader macroeconomic factors are currently outweighing the underlying demand argument.

This distinction is important for investors because silver does not behave solely like a traditional safe-haven asset. Its industrial use means expectations surrounding global economic activity can also influence prices.

The current sell-off therefore reflects a combination of factors rather than a change in industrial demand alone.

Key silver support and resistance levels

Market analysts are closely watching the Rs 2.27 lakh-Rs 2.28 lakh zone after Monday’s decline.

According to the technical levels cited by Ponmudi, the Rs 2,32,000-Rs 2,33,000 range had earlier acted as a support zone. Following the breakdown, that area could now become a resistance zone.

The next resistance level is seen around Rs 2,36,000-Rs 2,37,000.

On the downside, the immediate support is placed around Rs 2,27,000-Rs 2,28,000, followed by a lower support zone of Rs 2,23,000-Rs 2,24,000.

The Rs 2.27 lakh-Rs 2.28 lakh region is particularly significant because it coincides with the 200-day exponential moving average cited in the market analysis.

Technical levels are reference points rather than guarantees of future price movements, especially during periods of high volatility.

What does the RSI indicate?

The Relative Strength Index, or RSI, is another technical indicator being watched by traders.

Ponmudi said the RSI stood at 41.12 and was below its signal line, indicating weakening momentum. An RSI reading below 50 generally reflects weaker momentum, although the indicator by itself does not establish whether a price will rise or fall.

According to the technical view, a sustained move above Rs 2,32,000 could help stabilise the near-term structure. Conversely, a decisive break below Rs 2,28,000 could expose the metal to the Rs 2,24,000 area.

These levels are particularly relevant after Monday’s sharp fall because traders will be watching whether silver can hold the immediate support zone or whether selling pressure continues.

Global factors remain crucial

The direction of silver prices in the near term is likely to remain closely tied to movements in the US dollar, Treasury yields and crude oil prices.

Investors are also expected to monitor upcoming US economic data, particularly inflation and employment indicators, because such releases can influence expectations about Federal Reserve monetary policy.

Geopolitical developments could add another layer of volatility. Market analysts have also highlighted oil prices and developments surrounding US-Iran tensions among the factors that could influence precious-metal sentiment.

For Indian investors, currency movements are another important consideration. A weaker rupee can partly cushion domestic precious-metal prices when international prices fall, while a stronger rupee can have the opposite effect.

Silver outlook remains volatile

Monday’s fall shows the pressure currently facing silver despite its industrial-demand fundamentals. The immediate technical picture will depend on whether prices can hold the Rs 2.27 lakh-Rs 2.28 lakh support zone and whether the metal can eventually reclaim the Rs 2.32 lakh-Rs 2.33 lakh area.

A sustained break below the immediate support could bring the Rs 2.23 lakh-Rs 2.24 lakh region into focus, according to the technical analysis cited above. On the other hand, a recovery above Rs 2.32 lakh could indicate some stabilisation.

For investors and traders, the sharp intraday swings underline the importance of considering both global macroeconomic developments and domestic MCX movements rather than relying on a single price level.

With oil prices, the dollar and US yields continuing to influence precious-metal markets, silver could remain volatile in the near term.