The silver market continues to face difficulties as prices remain trapped below the 75 USD/ounce mark. Although silver prices may rise again later this year, a major bank warns that this precious metal is facing many obstacles due to changing industrial demand.
In the latest report on precious metals, the commodity expert group of Bank of America (BofA) led by Mr. Michael Widmer – Director of Metal Research said they are still optimistic about the possibility of silver reaching the 100 USD/ounce mark in the fourth quarter of this year. However, this upward momentum is said to be difficult to maintain for long.
Strong gold prices may continue to pull silver over the 100 USD/ounce mark in the coming months, but we do not think silver can maintain a superior upward momentum in the long term due to weakening fundamental demand," the analysis group said.
In the long term, BofA forecasts that silver prices may return to around 75 USD/ounce in Q2/2027.
According to experts, the biggest obstacle for silver today is that high prices are forcing many industries to find ways to reduce silver use or replace it with cheaper materials.
We believe that demand from the industrial sector peaked last year due to many resonance factors, including the trend of manufacturers reducing the use of silver to reduce costs," the report stated.
BofA said this pressure is increasing as solar panel production in China is slowing down, while the number of new solar power projects this year is at risk of declining.
Although the demand for silver in some other sectors is still increasing, the scale is not large enough to create a significant boost for the total industrial demand.
According to BofA, the sharp increase in silver prices could cause the market to quickly return to a surplus state due to reduced industrial consumption.
The nearly exponential increase in silver prices has put great pressure on the profit margins of solar panel manufacturers, forcing them to find ways to reduce silver in industrial products," the analysis team said.
Reducing silver use may cause the global silver supply deficit to decrease by up to 90% this year.
BofA even believes that the silver market in 2026 may have a very small deficit, to the point that just a slight selling pressure from investors is enough to make the market turn to oversupply.
In this context, the bank forecasts that silver will increasingly have the characteristics of precious metals rather than industrial metals.
The decisive factor in the silver price trend in the coming time may lie in investment demand," the report emphasized.
Over the past time, silver has still performed better than gold thanks to stable industrial demand, especially in the solar energy sector, helping the silver market maintain a supply shortage for 6 consecutive years.
Meanwhile, gold is under pressure as it becomes a more expensive monetary asset in a high-interest rate environment. The fact that the Fed is expected to continue raising interest rates by the end of this year has increased the opportunity cost of holding gold – an unprofitable asset.
Currently, the gold/silver ratio is trading around 59.43 points, in the middle of the accumulation zone that has lasted for many months.
Although more cautious with silver, BofA said that this metal still plays an important role in the solar energy industry and demand is unlikely to fall sharply.
The bank also believes that the conflict in Iran continues to boost demand for green energy and oil alternatives.
In addition, BofA warned that the silver market still risks strong fluctuations due to liquidity being quite thin at some points.
Silver prices once soared to $120/ounce at the beginning of the year as investors and businesses competed to buy increasingly scarce physical silver.
According to experts, another major risk is that silver may be affected by trade negotiations between the US, Canada and Mexico when the three countries begin renegotiating the North American free trade agreement.
The US global trade war and the risk of tariffs on silver have forced gold and silver businesses and many organizations to maintain large inventories in the US, reducing available supply to the international market.
These negotiations have a particularly large impact on the silver market because Canada and Mexico are currently the two largest silver suppliers to the US. The uncertainty surrounding the negotiations is one of the reasons why silver prices rebounded above the 80 USD/ounce mark" - the analysis team said.
BofA also noted that this development takes place in the context that the amount of assets held by physical silver ETFs continues to decrease, while the latest data from the CFTC shows that speculators have not really strongly returned to the futures silver market.
