Silver falls 2% to ₹1,91,516/kg as Fed caution and $116 oil test the metal's AI story
Silver lost more than 2% on Tuesday, with MCX silver dropping about ₹4,200 to ₹1,91,516 per kilogram and international spot silver falling 2.1% to $52.77 an ounce, as a stronger dollar and uncertainty over the Federal Reserve's rate path weighed on precious metals.
The sell-off has a clear chain of causes. Brent crude climbed above $116 a barrel after attacks linked to the Houthi group on Saudi infrastructure, feeding fears that energy-driven inflation will keep the Fed restrictive for longer. The dollar sat near a two-week high, dimming bullion's appeal to overseas buyers, and traders have priced an roughly 80% chance of a December rate increase, according to CME FedWatch figures cited in the market analysis. Investors now wait on the Fed's 28 October decision and US PCE inflation data the following day.
Silver has fallen harder than gold. Over the previous week it dropped 5.4% internationally to $53.90 an ounce and 7.3% on MCX to around ₹1.96 lakh per kg. Renisha Chainani, chief research officer at Augmont, put MCX silver support at ₹1,90,000 and resistance at ₹2,02,000, with spot silver support at $52.40 and resistance at $55.80. Ventura's NS Ramaswamy warned against shorting into oversold conditions, calling $52.50 to $55.75 a no-trade zone and flagging a move beyond $55.75 as a possible climb to $58.
The longer view is brighter. Ramaswamy said demand from AI infrastructure and persistent supply deficits could lift silver to $75-$80 an ounce, or up to ₹2.84 lakh per kg, in the second half of 2027. Nearer term, central bank buying, Indian exchange-traded fund inflows and seasonal demand ahead of Dhanteras and Diwali may offer support, and analysts favour staggered buying near the ₹1.90 lakh zone rather than chasing rebounds.
