Silver’s meteoric rise has been supported by a cocktail of supply tightness, speculative buying and safe-haven flows amid global macroeconomic uncertainty. But with the start of the new year, the tone in the market has become more cautious.Price swings have intensified and traders are beginning to reassess the sustainability of last year’s momentum as new supply emerges and cracks in the demand side become visible.
Despite the uncertainty surrounding silver prices, HSBC predicts a bullish view for the first half of 2026 in its latest report, driven by continued physical market tightness, robust investment demand and supportive macroeconomic factors.
The global investment bank has raised its average price forecast for the year to USD 68.25/oz, and expects prices to fluctuate within a wide range of USD 88 to 58/oz. The year-end target is USD 62/oz.
The bank points to a range of factors that support silver in the short term. These include continued tightness in the physical market in London, record high leasing rates and backward yields on CME futures, all of which point to a shortage of deliverable silver. A significant portion of silver reserves remain hidden in New York vaults following rate-driven shifts in 2025, and HSBC believes the migration of these assets to London may not occur until later in the year.
Additionally, HSBC’s FX Research team predicts a weaker US dollar in 2026, which typically supports demand for non-yielding assets such as silver. The metal is also expected to benefit from heightened geopolitical tensions, continued demand for safe havens via ETF inflows and strong gold prices, which often have a spillover effect on silver investments.
However, momentum could reverse in the second half of the year, HSBC warns.
While the market remains tight for now, mine production and recycling supply are expected to increase, and industrial demand, which accounts for a significant portion of total silver consumption, is expected to weaken.
The bank estimates that the silver production/consumption deficit will decline from 230 moz in 2025 to 140 moz in 2026, and decline further in 2027.
HSBC’s analysts also pointed to potential long liquidation in ETFs and net long positions on the CME, which could add to downside pressure if investor sentiment turns. The bank expects a gradual resolution of the physical tightness and sees the possibility of a price correction in the second half of the year, especially if flows to safe havens decrease or macro conditions change.
Also read: Silver price falls by Rs 10,000 per day. Is the white metal’s rally in jeopardy?
In summary, while silver prices may continue to find support in early 2026, HSBC believes volatility will remain high, with increasing risks of a pullback in the second half of the year as supply improves and demand cools.
(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times)
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