Silver prices have witnessed significant volatility in recent weeks, with a 38 percent jump this month alone. After a dip on Thursday, silver rebounded sharply in early trading on Friday, fueled in part by insider trading allegations on the Multi Commodity Exchange (MCX).
Insider Trading Allegations
The All India Jewellers & Goldsmith Federation (AIJGF) has written to the Finance Minister, alleging that silver derivative contracts on MCX were trading at a premium of around ₹40,000 per kg above benchmark or spot-linked parity on January 21. The federation claims the surge was triggered by rumors of an impending hike in import duty on silver.
The letter, signed by AIJGF’s National President Pankaj Arora and General Secretary Nitin Kedia, urges regulatory scrutiny of the MCX silver contracts, citing sudden price dislocations affecting domestic traders.
MCX Response
MCX has denied the allegations, stating that it has a robust surveillance mechanism and operates fully within regulatory guidelines. A spokesperson explained that recent geopolitical developments combined with domestic factors have led to volatility in silver markets. MCX contracts, the spokesperson added, provide hedging against currency fluctuations, duties, and local market conditions.
Market Impact
During early trading on Thursday, silver and gold ETFs fell nearly 20 percent, before closing about 11 percent lower. On the MCX, March silver contracts dropped 2.7 percent, while February gold contracts declined 0.8 percent by the end of the day.
Analysts note that while short-term fluctuations are partly driven by market speculation, geopolitical events and import duty expectations continue to be key drivers of silver prices.
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