The contract was around ₹2,064 per kg lower than the previous MCX close of ₹2.27 lakh per kg.
The latest fall follows a sharp sell-off in silver on Monday (September 28). In the national capital, silver prices fell ₹5,000 to ₹2.32 lakh per kg, inclusive of taxes, from ₹2.37 lakh per kg on Friday (September 25), according to local traders.
In international markets, silver had dropped 4.6% to $61.34 per ounce on Monday (September 28) as a stronger US dollar and rising US yields weighed on precious metals.
According to Vikram Subburaj, CEO, Giottus.com, gold and silver are under pressure as global yields and the dollar move higher. He said higher US Treasury yields are weighing on bullion, while markets are also pricing in a higher probability of another US Federal Reserve rate hike.
Satish Dondapati, Fund Manager ETF, Kotak Mutual Fund, said gold and silver have corrected due to higher US yields and crude prices. Higher crude prices could push inflation higher, increasing the odds of another rate hike in December, while higher yields and a stronger dollar are weighing on precious metals.
Dondapati expects near-term volatility in gold and silver but remains positive on the medium- to long-term outlook, citing global debt, central-bank buying and rising portfolio allocation as supporting factors.
What does this mean for silver investors?
The current fall comes after silver had climbed to above ₹2.40 lakh per kg earlier this month, according to Subburaj.
This means the recent correction has been sharp, and investors are now facing higher short-term volatility in the metal.
For Indian investors, the rupee is another factor to watch. A weaker rupee can cushion some of the decline in global silver prices, Subburaj said.
He expects US inflation and employment data, Treasury yields, the dollar and crude oil prices to remain important triggers for bullion prices.
Subburaj said the current volatility calls for patience and that long-term investors can consider staggered buying rather than trying to time the bottom.
For leveraged traders, he advised reducing exposure and using strict stop-losses.
-With PTI inputs