CHENNAI: Silver prices ended 2025 with a sharp and unsettling correction, tumbling by around Rs 15,000 per kg on the final trading day of the year, as aggressive profit booking and thin year-end liquidity triggered heavy selling across commodity markets. On the Multi Commodity Exchange, silver futures for the near-month contract fell close to 6 percent in a single session, marking one of the steepest one-day declines of the year and bringing an abrupt halt to a rally that had dominated most of 2025.
The fall came after an exceptional run-up over the past twelve months, during which silver prices more than doubled, driven by a combination of speculative interest, tight physical supply and strong industrial demand from sectors such as electronics, renewable energy and electric vehicles. The parabolic nature of the rally meant that many traders were sitting on substantial unrealised gains, making the market vulnerable to sharp corrections once selling began. As the calendar year drew to a close, several participants chose to lock in profits, a move amplified by low trading volumes typical of the final sessions of December.
Global cues also added to the pressure. International silver prices had already begun to soften earlier in the week, prompting domestic traders to pare positions. The strengthening of the US dollar and a cautious shift in risk appetite across global markets further reduced the appeal of precious metals in the short term. In addition, higher margin requirements and concerns over crowded speculative positions forced some leveraged traders to unwind holdings quickly, intensifying the decline.
Despite the dramatic fall, the broader picture for silver remains complex rather than outright bearish. Even after the correction, prices are still significantly higher than at the start of the year, underscoring the strength of the long-term uptrend. The sharp drop appears more reflective of exhaustion after an extraordinary rally than a fundamental breakdown in demand. Industrial consumption continues to remain robust, while supply constraints and strategic interest in silver as a critical metal for energy transition technologies continue to provide long-term support.
That said, the nature of the recent fall signals a clear shift in market behaviour. The phase of one-way gains has likely given way to heightened volatility, where sharp rallies and equally sharp corrections may become more frequent. Technically, traders are now closely watching key support zones, as a sustained break below important levels could open the door to a deeper correction before prices stabilise. Conversely, if silver manages to hold these supports and attract fresh buying interest, a gradual recovery cannot be ruled out, though the pace is likely to be far more measured than in 2025.
For traders, the message from the year-end crash is one of caution and discipline. Short-term participants should avoid knee-jerk reactions driven by intraday swings and instead focus on risk management, using tight stop losses and smaller position sizes as volatility remains elevated. Chasing prices, either on sharp declines or sudden rebounds, could prove costly in the current environment.
Those with a medium-term view may consider a staggered approach, waiting for clearer signs of price stabilisation before adding exposure. Accumulating in phases rather than committing capital at a single level can help manage risk if the correction extends further. For long-term investors, the correction may eventually present an opportunity, but only if approached with patience and diversification, keeping in mind that silver’s dual role as both a precious and industrial metal makes it particularly sensitive to shifts in global growth expectations.
Market analysts say that while the long-term fundamentals for silver remain largely intact, the sharp correction is a reminder that volatility is now firmly back in play. "Traders heading into 2026 would be better served by a cautious, strategy-driven approach rather than relying on the momentum that defined much of the past year," they say.