Large banks forecast that silver prices will hardly break through when demand weakens and supply increases sharply

Swiss bank UBS has just lowered its silver price outlook for the coming years, saying that the precious metal market is facing pressure from reduced investment demand, stagnant industrial consumption and increased mining supply.

In the latest report, strategists Wayne Gordon and Dominic Schnider at UBS said that silver demand from the solar sector will weaken in 2026 due to high silver prices causing production costs to increase. In addition, demand for silver and jewelry is also affected as consumers tighten spending.

UBS estimates that these factors alone could cause global silver demand to fall by about 50 million ounces.

In the investment segment, UBS bank said that capital inflows into silver are clearly weakening. Silver holdings in ETFs have decreased by nearly 70 million ounces, to about 794 million ounces. Meanwhile, speculative positions in the futures contract market have also decreased sharply, to just over 100 million ounces.

Therefore, UBS has lowered its forecast for silver investment demand for the whole year from more than 400 million ounces to about 300 million ounces. However, the bank believes that this level is still "quite optimistic" in the context of continuous cash flow withdrawals from the market since the beginning of the year.

Along with adjusting demand prospects, UBS also lowered its silver price forecast for many periods. Accordingly, the bank currently forecasts silver prices to reach about 85 USD/ounce by the end of Q2/2026, significantly lower than the previous forecast of 100 USD/ounce.

Other forecast levels were also adjusted down: September 2026 target from 95 USD to 85 USD/ounce, year-end 2026 from 85 USD to 80 USD/ounce, and forecast for March 2027 down from 85 USD to 75 USD/ounce.

UBS believes that the main reason comes from the supply-demand imbalance in the silver market that is no longer as serious as before. The bank currently forecasts that the global silver market in 2026 will be short of about 60-70 million ounces, much lower than the previous estimate of 300 million ounces.

With a smaller supply deficit, we have adjusted down the price outlook at all forecast stages. In the base scenario, silver prices are likely to move sideways" - a report by Swiss Bank UBS stated.

However, UBS believes that the continued increase in gold prices could become an important supporting factor for silver. According to this bank, the correlation between the two precious metals has increased significantly recently. UBS forecasts that the gold/silver price ratio will gradually return to the 75-80 range in the near future.

In the opposite direction, silver supply is assessed to be improving. UBS expects global silver mining output to reach about 850 million ounces, contributing to reducing shortage pressure in the market.