Silver Prices Hit Record Highs; MCX Hikes Margins to Manage Risk

Silver prices are reaching new heights globally and in India, driven by strong investment demand, festival buying, and supply constraints. The Multi Commodity Exchange of India (MCX) has responded by raising margins on silver and gold contracts to maintain market stability.

MCX Raises Margins

To manage rising risks in trading, MCX increased margins on gold contracts by 1% and on silver contracts by 1.5%. The bourse offers futures and options trading in silver, including 30 kg, 5 kg, and 1 kg contracts.

MCX noted that recent backwardation between global and domestic silver prices reflects high demand in both international and local markets. The exchange is closely monitoring positions and will take necessary steps to ensure risk management and market stability.

Expiry and Settlement of Contracts

The near-month 30 kg silver contracts are set to expire on December 5, while the 5 kg and 1 kg contracts will expire on November 28. Outstanding positions in these derivative contracts will be settled through physical delivery at expiry. For options contracts, only in-the-money contracts will convert into underlying futures contracts.

Global Silver Prices Reach All-Time High

On the global front, silver prices surged to an all-time high of US$52.50 per ounce. The rally was fueled by a short squeeze in London and growing demand for safe-haven assets, with gold also continuing its record run.

Concerns over liquidity in London have sparked a worldwide hunt for silver, pushing prices to near-record levels in New York. Traders are even booking transatlantic cargo flights for silver bars, a practice usually reserved for gold, to capitalize on the price surge.

Rising Demand from India

Recent weeks have seen a jump in silver demand from India, particularly driven by the festive season. Investment demand through Silver ETFs and purchases of physical jewelry and silver products has drawn down available supplies in global markets.

The combination of high investment interest, industrial requirements, and festive buying has contributed to the tightening of supply and higher prices domestically.

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Conclusion

Silver is witnessing unprecedented demand globally and in India, pushing prices to record highs. MCX’s move to increase margins reflects a proactive approach to manage risk and ensure stability in volatile times. With festival season demand and investment interest likely to continue, silver is expected to remain in the spotlight for traders and investors alike.

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