Silver prices slide below Rs 2 lakh per kg as Centre acts to secure festive supply

Silver prices have dropped below the ₹2 lakh per kilogram mark on Indian exchanges, extending a steep worldwide correction across precious metals.

On the Multi Commodity Exchange (MCX), December silver futures fell 3.5 per cent on Friday to hit ₹1,92,800 per kilogram. The fall marks a two-day slide of ₹17,000 and puts the metal down more than 50 per cent from its record highs touched earlier this year. Gold also remained under pressure, trading near ₹1.40 lakh per 10 grams, down roughly ₹23,000 from its August peak.

Why precious metals are falling

The selloff is largely driven by external macroeconomic headwinds. Escalating tensions in the Middle East and supply concerns pushed Brent crude towards $115 a barrel, reviving inflation fears across Western economies.

Hotter-than-expected US consumer and producer price data have reinforced expectations that the US Federal Reserve will maintain high interest rates for longer. Because bullion yields no interest, climbing US bond yields and a firmer US dollar sharply raise the opportunity cost of holding metals, prompting institutional investors to trim exposure.

Industrial demand uncertainties have also weighed heavily on silver, which serves as both an investment asset and a critical raw material for solar manufacturing, electric vehicles, and consumer electronics.

Centre steps in to ensure domestic supply

While international commodity volatility has unsettled global traders, the Indian government has moved swiftly to safeguard domestic stability and protect consumers from supply crunches ahead of peak festival buying.

The Centre has sanctioned import permits for 6,500 metric tonnes of silver over the next six months. Because India relies on international shipments for more than 80 per cent of its silver consumption, the decisive release of import authorisations addresses local availability well before wedding and festive demand accelerates.

The intervention follows tightened import norms established between May and June, when authorities placed silver powder and grain under restricted categories to prevent speculative distortions.

Industry leaders welcomed the volume of permits, noting that the guaranteed physical inflow will cool excessive domestic premiums. Chirag Thakkar, chief executive of Amrapali Group Gujarat, observed that the permitted quantity is substantial and will ensure sufficient liquidity in local spot markets.

What happens next

Market participants expect precious metals to remain sensitive to international cues over the coming weeks. The CME FedWatch Tool showed an 81 per cent probability of a US Federal Reserve rate hike in December, keeping short-term speculative sentiment subdued.

Analysts note that while global price swings will persist until interest-rate paths in Washington and Frankfurt clear, India’s strategic supply management insulates local fabricators and industrial users from acute shortages. For long-term participants, the ongoing price moderation, combined with growing industrial adoption across India's expanding renewable energy and electronics manufacturing sectors, provides a more balanced foundation for future demand.