Silver Price Falls Again: MCX Silver Drops ₹2,000 As Rising Yields Keep Pressure On Bullion

Silver prices extended their losses on Tuesday, September 29, with MCX silver falling another ₹2,000 per kg after dropping more than ₹7,000 in the previous session. MCX silver was trading around ₹2.29 lakh per kg, while international silver prices fell to around $61 an ounce after losing about 5% on Monday.

The latest fall means silver has lost around ₹8,800 per kg on the MCX over the past two sessions. On Monday, September 28, MCX December silver closed sharply lower after falling more than 3%, as higher US Treasury yields, a stronger dollar and rising crude oil prices triggered a broad sell-off in precious metals.

The pressure has continued into Tuesday as the US 10-year Treasury yield climbed to 5.24%, its highest level since 2007, while the 30-year yield rose to 5.56%, the highest since 2004. The US 2-year yield also jumped 11 basis points as markets increased bets on a Federal Reserve rate hike in October.

Anindya Banerjee, Head of Research – Currency, Commodities and Interest Rates at Kotak Neo, said the main force driving markets has now shifted from the oil headlines to the global rise in interest rates. The energy shock is feeding into bond markets, pushing up the cost of capital and putting pressure on precious metals.

Why Is Silver Price Falling Today?

Higher interest rates are making it harder for silver to recover after its recent fall. Rising bond yields increase the opportunity cost of holding precious metals, while higher real yields have added to the pressure on non-yielding assets.

Markets are now pricing a roughly three-in-four chance of a Federal Reserve rate hike in October, with a further rate increase by December almost fully priced in. This change in expectations has pushed US yields higher and weighed on both gold and silver.

Crude oil is still an important part of the story. Brent crude settled near $105 a barrel on Monday after touching $108.50, while uncertainty over the reopening of the Strait of Hormuz has kept prices high.

But Banerjee said the key shift is that the oil shock is now feeding into bond markets. In his view, the rise in global interest rates has become the dominant force for precious metals, rather than the oil headlines themselves.

Silver Price Outlook:

Silver could fall towards $59 in the very short term, Banerjee said. The $62-$63 zone has now become a major resistance area, and any recovery remains vulnerable to selling as long as spot silver stays below $63.

A break below $59 could take silver towards $57 and then $56.50. In the domestic market, silver remains bearish while it stays below ₹2,31,000, with the risk of a move towards ₹2,15,000, according to Banerjee.

Gold has also come under heavy pressure, falling about 4% on Monday to around $4,115. Banerjee sees strong support for gold at $4,080-$4,100, while a sustained break below $4,080 could open the way towards $3,950.

The rupee could add another variable for Indian commodity prices. It closed at 95.97 against the US dollar and could move towards 96.50 in the coming days, according to Banerjee. A weaker rupee can cushion some of the decline in international silver prices for domestic investors.

The immediate market triggers are US inflation data on Wednesday and payrolls data on Friday. Developments in the Qatar-mediated contacts between Washington and Tehran will also remain in focus. Softer US data could ease pressure on yields, while stronger data could keep interest rates driving the precious-metals market.

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