Silver price outlook: Silver prices extended their decline on Tuesday, with MCX silver falling more than 2% as a stronger US dollar and uncertainty over the Federal Reserve's interest rate outlook weighed on precious metals. The white metal dropped by around ₹4,200 to ₹1,91,516 per kg, while international spot silver declined 2.1% to $52.77 per ounce.The sharp correction has raised questions about how much further silver prices could fall in the near term.
However, analysts believe that the metal's longer-term prospects could remain supported by industrial demand, particularly from the artificial intelligence (AI) infrastructure sector, and persistent supply deficits.They believes silver could eventually reach around ₹2.84 lakh per kg in the second half of 2027, even as prices face near-term turbulence.Why are silver prices falling? Fed decision, inflation fears weigh on sentimentThe recent sell-off in precious metals has been driven by concerns that rising crude oil prices could keep inflation elevated and prompt the US Federal Reserve to maintain a restrictive monetary policy for longer.The US dollar remained near a two-week high on Tuesday, reducing the appeal of dollar-denominated bullion for overseas buyers.
Investors are awaiting the Federal Reserve's policy decision on October 28 and the US Personal Consumption Expenditures (PCE) inflation data, scheduled for October 29. The PCE index is the central bank's preferred inflation gauge.Market participants largely expect the Fed to hold interest rates steady this week. However, uncertainty over the timing of future rate cuts and the possibility of another rate hike have weighed on sentiment.
Traders have priced in an approximately 80% chance of a December rate increase, according to the CME FedWatch Tool figures provided in the source material.Geopolitical developments have added to the uncertainty. Attacks linked to the Houthi group on Saudi infrastructure pushed Brent crude oil prices above $116 per barrel, raising concerns about energy-driven inflation. Although geopolitical tensions can traditionally support safe-haven assets such as gold and silver, the market has focused on the risk that higher oil prices could force central banks to maintain tighter monetary policies.Silver has also experienced a sharper correction than gold.
The supplied market analysis showed that silver fell 5.4% internationally to $53.90 per ounce and declined 7.3% on MCX to around ₹1.96 lakh per kg over the previous week.Despite the weakness, some support could emerge from central bank buying, Indian exchange-traded fund inflows and seasonal demand ahead of Dhanteras and Diwali.Silver price outlook: Key support, target and stop loss levelsDespite the sharp correction, analysts have identified important technical levels that traders should monitor before taking fresh positions.Renisha Chainani, Chief Research Officer at Augmont, said silver was approaching an important support zone on the domestic exchange."Spot gold faces resistance at $4,075, with support at $3,960 and $3,890.
Spot silver has support at $52.40 and resistance at $55.80. On MCX, gold support sits at ₹1,40,000–1,39,000 with resistance at ₹1,45,500, while silver has support at ₹1,90,000 and resistance at ₹2,02,000," Chainani said.According to these levels, ₹1.90 lakh per kg is an important support zone for MCX silver, while ₹2.02 lakh per kg is the immediate resistance level. A sustained recovery above resistance would be important for improving the near-term technical outlook.Meanwhile, Ventura's NS Ramaswamy also cautioned traders against aggressively shorting silver after its steep decline, citing the risk of selling into oversold conditions."Silver is in a choppy zone or no-trade zone at $52.50 to $55.75.
It's in a free fall, but the primary risk is in shorting into extreme oversold conditions. Trend beyond $55.75 could see a climb to $58 or 5% upside," Ramaswamy said.For short-term traders, Ventura identified ₹1,92,500 as a downside target, with a potential selling opportunity around ₹1,95,500 and a stop loss at ₹1,98,000 in the strategy provided. These levels indicate that the immediate trading outlook remains cautious, even though the risk of a technical rebound has increased.The longer-term outlook is more constructive.
Ramaswamy noted that growing demand from AI infrastructure and persistent supply deficits could support silver prices over the coming years, with the metal potentially reaching $75-$80 (up to 2.84 lakh/kg) per ounce in the second half of 2027.For now, the Federal Reserve's decision, inflation data and movements in crude oil prices are likely to influence silver's next move. With MCX prices approaching the ₹1.90 lakh support zone, analysts favour staggered buying near support rather than chasing short-term rebounds.
Silver's longer-term potential remains intact in the cited analysis, but near-term volatility and the risk of further declines warrant caution.Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
