The market turmoil intensified when CME Group, a major trading platform, raised the funds needed to trade silver futures. This was his third such increase in just two weeks. The high costs forced many traders to sell their stakes early. Concerns about the Federal Reserve’s tight monetary policy and the strong US dollar increased pressure following the nomination of Kevin Wersh.“Last week’s sharp decline was driven by Fed dovish expectations, a stronger dollar and a sharp rise in CME margins following Kevin Warsh’s nomination, which forced leveraged unwinding,” said Harish V, who leads commodity research at Geojit Investments Ltd. He said profit-booking after hitting record highs made the market even more volatile, as quoted by ET.Recent events have shown how quickly silver prices can change. These sudden price fluctuations have many investors worried about the stability of the market. The combination of higher trading costs, profit-taking, and macroeconomic factors has created a storm in the silver market.
Time to invest?
Fund managers are encouraging investors to consider investing in silver despite the recent volatility and recommend a systematic approach for long-term gains. While silver prices have fallen sharply from recent highs around $120, experts believe the fundamental outlook remains strong due to supply deficit and strong industrial demand, though they stress the importance of careful position sizing and risk management.“Yes, at the current levels, investors can consider investing in silver ETFs with a long-term perspective and through a systematic approach,” Satish Dondapati, fund manager, Kotak Mahindra AMC, was quoted as saying by ET. He advised limiting allocation to precious metals to 15-20% depending on risk tolerance.The recent price decline has been fueled by silver’s weak market structure. “Silver has declined mainly because it has rallied very quickly in a short period of time,” said Akshat Garg, head of research and product at Choice Wealth. He said silver typically shows more dramatic price fluctuations than gold due to its smaller market size.According to ET analysis, technical signals suggest that prices may stabilize soon. Silver is now trading in the $71-$80 demand zone, with support near the 100-day moving average at $64. This indicates a possible correction after a correction from the $120 level.Wealth managers strongly recommend a systematic purchasing approach rather than a lump sum investment. “Investors should avoid chasing prices or reacting to day-to-day moves. Silver works best as a small, supporting allocation in a portfolio and not as a core holding,” Garg advised.Experts stressed the focus on long-term fundamentals such as geopolitical tensions and central bank policies while monitoring the dollar and Fed cues. He suggests that the recent decline may provide opportunities for those who missed out on earlier gains, provided they can handle continued market volatility.“For long-term investors, this phase is about patience and discipline rather than action,” Garg said. According to him, a move above $80-$85 could signal further correction towards $100-$105, although investors should be prepared for ongoing market volatility.(Disclaimer: The recommendations and views given by experts on the stock market and other asset classes are their own. These opinions do not represent the views of The Times of India)
