New Delhi, March 16 Silver futures plunged by ₹4,232 to ₹2.55 lakh per kilogram in the futures trade on Monday, as weak domestic demand and a strong US dollar weighed on investors' sentiment.
On the Multi Commodity Exchange, the white metal for the May delivery declined by ₹4,232, or 1.63 per cent, to ₹2,55,203 per kilogram in a business turnover of 5,787 lots.
Analysts said silver prices remained under pressure as weak retail demand in the domestic market coincided with macroeconomic headwinds in global markets.
Indian bullion dealers have extended discount offerings to unprecedented levels, reaching USD 83 per ounce over domestic official pricing – inclusive of 6 per cent import and 3 per cent sales levy – the highest discount observed since July 2016, compared to USD 28 in the previous week, Renisha Chainani, Head - Research at Augmont, said.
The sharp increase in dealer discounts indicates a profound weakening in retail demand for precious metals, she said, adding that jewelers have largely refrained from purchases as they focus on closing their books for the financial year.
The subdued buying activity across the jewelry sector and distribution channels has limited near-term support for bullion prices, Chainani said.
Globally, silver futures on the Comex for the May contract dipped USD 1.28, or 1.58 per cent, to USD 80.06 per ounce.
"Silver fell to around USD 80 per ounce, sliding for a fourth straight session, as the Iran war entered its third week and oil prices remained volatile," Jigar Trivedi, Senior Research Analyst at IndusInd Securities, said.
According to analysts, persistent geopolitical tensions in West Asia and elevated crude oil prices have strengthened the US dollar and dampened the sentiment for the precious metals.
Manav Modi, Analyst - Commodities, Motilal Oswal Financial Services Ltd, said investors are awaiting key central bank meetings during the week, including announcements by the US Federal Reserve, Bank of Japan, European Central Bank, Bank of England, and the prime loan rate decision by the People's Bank of China.
Traders will also closely watch the press conference by Fed Chair Jerome Powell for fresh insights on the trajectory of policy outlook.