MCX Silver Prices Plunge 2%: Why Silver Futures and IBJA Rates Declined Sharply Today

Silver futures dipped on May 26 on the Multi Commodity Exchange. Notably, Silver Futures with July 3, 2026 expiry slipped more than 2 per cent on the MCX today falling to Rs 2,69,913 per kilogram.

The decline seen in Silver Futures today erased the gains made by the commodity in the previous session. It is likely that several market participants were caught off guard and triggered a  quick profit booking.

On the other hand, physical bullion markets also tracked the bearish sentiment of the futures market to trade significantly lower. According to the India Bullion and Jewellers Association, the official domestic rate for silver of 999 purity fell sharply by Rs 4,750 to settle at Rs 2,66,350 per kilogram. 

Why Did Silver Futures Decline Today

Silver futures declined on May 26 as geopolitical frictions between US and Iran escalated, crude oil prices gained and the US dollar strengthened.

Escalating Geopolitical Friction

One of the key reasons for the dip in Silver Futures seen today was the escalation of military tensions between the United States and Iran. Following news of the escalation, investor sentiment turned cautious after the US Central Command reported strikes against missile launch sites and mine-laying vessels in southern Iran. The news of escalating conflict shattered the optimism  seen in the global market on May 25 around a potential diplomatic breakthrough in the West Asia conflict.

Surging Crude Oil Prices

Crude oil prices witnessed an uptick on May 26 as conflict escalated and global energy markets reacted to it. Brent crude prices surged toward $98 per barrel after the near 5 per cent decline seen yesterday. The price rise stoked fears of energy driven fuel inflation. Even though precious metals are seen as safe-haven assets the threat of rising commodity costs introduces a more complex problem for bullion.

Elevated inflation caused by rising crude prices increases the chances of the US Federal Reserve maintaining tighter monetary policy conditions for a longer period in the form of high yield on US debt securities. The expectation of rates remaining higher for longer make silver less appealing to investors as it does not yield any interest leading to selloffs.

US Dollar Strengthening

In the global market, spot silver fell nearly 2 per cent to trade below $77 per troy ounce. The decline compounded the downward pressure on Silver Futures traded on the MCX. On the other hand, a weakening rupee added to the pressure as well. On May 26, the rupee slipped by 17 paise to Rs 95.43 against the US Dollar.  As international silver is priced in dollars, the strengthening of the dollar makes the commodity more expensive for foreign buyers, squeezing global physical demand.

Silver has a dual purpose both as a precious metal with a safe haven appeal and a key component for several industries including solar energy, artificial intelligence and automotive sector. Thus the precious metal’s price is impacted by macroeconomic developments. In the current week the release of key US economic indicators such as US Gross Domestic Product and inflation numbers is likely to be watched by investors for further clarity on the price movement of the commodity.