NEW DELHI — Silver prices could see modest gains as investment demand recovers, although a strong U.S. dollar and improving supply conditions are likely to limit significant rallies, according to a report released Monday by HSBC Global Investment Research.
The report suggests that silver prices are approaching equilibrium as supply shortages ease, reducing the likelihood of another sustained surge despite continued support from precious metal investors.
HSBC estimates that the global silver market recorded a supply deficit of 140 million ounces in 2025. The shortfall is expected to narrow substantially to just 5 million ounces in 2026 before widening slightly to 12 million ounces in 2027.
“Moderating deficits help explain our view that prices are near equilibrium levels and may be supportive but do not augur for robust rallies,” the report said.
The narrowing supply gap suggests that the market is moving toward a more balanced position following a period of tight availability and heightened investor interest.
HSBC also identified above-ground silver inventories and increased recycling activity as factors that could constrain future price increases and place downward pressure on the market over the longer term.
Silver experienced extraordinary price volatility earlier this year, reaching a record high of $121 per ounce on January 29, 2026.
The rally was driven by record gold prices, supply constraints, trade tariff uncertainties, geopolitical tensions and broader economic concerns that encouraged investors to seek safe-haven assets.
However, developments in the Middle East subsequently strengthened demand for the U.S. dollar, while rising oil prices fueled concerns that central banks could maintain tighter monetary policies to control inflation.
Weakness in global equity markets also contributed to shifts in investor sentiment and financial market volatility.
HSBC said movements in gold prices would remain an important influence on silver, given the relationship between the two precious metals.
“Gold prices will likely remain influential, and we are moderately positive on bullion, which should help sustain silver,” the report stated.
The bank also noted that renewed concerns over international trade tariffs could trigger additional rallies in silver prices.
However, weakening industrial consumption and jewelry demand may offset some of the support from investment activity.
On the supply side, declining ore grades and mine closures are expected to affect production during 2026. Those disruptions, however, are likely to be largely offset by new mining projects and expansions at existing facilities.
Separately, another recent report highlighted the growing popularity of silver as an investment asset in India.
Silver exchange-traded funds held approximately Rs 85,000 crore to Rs 86,000 crore in assets as of August, reflecting increased investor participation in commodity-linked financial products.
The report also pointed to the growing financialization of gold, expansion of India’s commodity derivatives market and rising long-term demand for industrial metals such as copper and aluminum.
HSBC’s outlook indicates that while investment flows and gold market strength could provide support for silver, improving supply conditions and currency movements may prevent prices from sustaining another major rally. (Source: IANS)
