Silver Price Crashes Rs 1.2 Lakh in 10 Days: Why Copper, Zinc, Aluminium and Nickel Are Also Falling?

Silver stole the spotlight in January with a stunning rally, surging from Rs 2.3 lakh to a peak of Rs 4.1 lakh before crashing below Rs 3 lakh within the same month. As silver has undergone a sharp correction over the past ten days, base metals such as copper, zinc, aluminium and nickel are also showing signs of cooling, mirroring a similar pullback after last month's strong surge.

Silver, along with base metals such as copper, zinc, aluminium and lead, fell within the broader risky asset basket last week.

"When silver moves, base metals also tend to move because these are all sister metals related to each other. Typically, when copper moves, zinc, lead and aluminium tend to follow. There is no direct correlation. They do not come from the same mines and do not share the same end-use. However, whenever copper rallies, other commodities tend to follow. A similar dynamic plays out in the case of silver," Navneet Damani, Head of Research, Commodities, Motilal Oswal Financial Services, told GoodReturns.

Falling Base Metals Price: Copper, Zinc, Aluminium, Nickel, More

According to GoodReturns data, the silver rate in India was at Rs 4,10,000 per kilogram on January 29 and fell nearly Rs 1,25,000 per kilogram to Rs 2.85 lakh/Kg on February 8. Meanwhile, gold rate in India has also followed a similar pattern. Gold rate in India stood at Rs 15,660 per gram on February 8. The prices of gold were at their all-time high of Rs 17,880 per gram on January 29.

The international silver price has tumbled by around 7.86% in one week. During the week, copper fell by 0.71%, lead prices declined by 1.88%, aluminium prices fell by 0.19%, zinc prices tumbled by 0.84%, and nickel prices fell by 1.82%, as per Trading Economics data.

Do Silver Prices Impact Base Metals?

"Yes, rising silver and gold prices can influence base metals like copper, aluminium, and zinc, though the linkage is indirect. The main channel is macro sentiment. Strength in precious metals often reflects expectations of inflation, currency debasement, or easier monetary policy, which also supports demand for real assets, including base metals," explained Darshan Rathod, COO, MULTYFI.

Conversely, a decline in precious metal prices is often driven by shifts in global monetary conditions, easing geopolitical tensions or changing macro expectations.

"Global monetary conditions influence central bank priorities worldwide, shaping their decisions on holding gold as a reserve asset. These trends often coincide with geopolitical tensions, which disrupt global security and supply chains essential for base metal trade. As a result, both precious and base metals tend to move together and act as relative safe havens during periods of economic and geopolitical uncertainty," explained Pankaj Singh, smallcase manager, Founder and Principal Researcher, SmartWealth AI.

Silver's Link to Base Metals Largely Driven by Market Sentiment

The link between silver prices and base metals is largely sentiment-driven, with base metals often tracking silver's moves both on the upside and the downside, noted Damani, while adding that there should ideally be a negative correlation between silver and copper prices.

"Silver is a byproduct of copper, zinc and lead mines, with almost 60% of global silver supply coming from these operations. When prices rise, copper prices also move up, partly because copper has been struggling with mine production, with about four to five major mines operating at lower capacity or shut due to multiple reasons. As conditions improve and production resumes, and when the byproduct fetches better prices, miners tend to increase output to capture more silver rather than focus solely on selling copper, zinc or lead. In the case of copper and silver, or zinc, lead and silver, higher byproduct prices encourage increased mining activity, which in turn leads to greater availability of copper, zinc and lead," added Damani.

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