UBS Lowers Silver Price Outlook Across Key Timeframes
UBS has revised its silver price forecasts downward across multiple time horizons, pointing to weaker investment flows, softer industrial demand, and increasing mine supply as the primary drivers behind the adjustment.
Updated Silver Price Targets
The bank now expects silver prices to reach $85 by the end of June, significantly lower than its previous $100 estimate. Its revised projections also include:
- September target: $85 (down from $95)
- December target: $80 (down from $85)
- March 2027 forecast: $75 (down from $85)
Currently, spot silver is trading near $73.80, reflecting ongoing pressure in the market.
Supply-Demand Balance Reassessed
The forecast revision follows a reassessment of the global silver market balance. UBS now estimates that the 2026 silver market deficit will narrow sharply to around 60–70 million ounces, compared to its earlier projection of approximately 300 million ounces.
Weak Demand from Key Sectors
According to strategists Wayne Gordon and Dominic Schnider, elevated silver prices are already impacting demand:
- Reduced consumption from the photovoltaic sector
- Declining interest in silverware and jewelry
Combined, these factors are expected to lower demand by roughly 50 million ounces.
Rising Mine Supply Adds Pressure
On the supply side, UBS expects a modest increase, with global mine production projected to reach approximately 850 million ounces. This increase further contributes to the easing of the market deficit.
Investment Demand Weakens
Investment demand has also softened noticeably. UBS reports that:
- Total known ETF holdings have declined by nearly 70 million ounces, now standing at around 794 million ounces
- Net speculative futures positions have dropped to just above 100 million ounces
As a result, the bank reduced its full-year investment demand forecast from over 400 million ounces to 300 million ounces, noting that even this revised figure remains relatively optimistic given the outflows observed so far this year.
Silver Expected to Trade Sideways
With a smaller deficit and weaker demand outlook, UBS now expects silver prices to move largely sideways in its base scenario, rather than experiencing strong upward momentum.
Gold Provides Key Support
Despite the bearish revisions, UBS highlighted the stabilizing role of gold. The bank continues to anticipate higher gold prices, which could act as an anchor for silver due to their increasing correlation.
It also expects the gold-silver ratio to gradually move toward the 75–80 range over time.
Strategy: Focus on Volatility
From a trading perspective, UBS favors selling volatility rather than holding outright long positions. Although volatility has declined from earlier highs—when one-month realized volatility briefly approached 150% in February—it remains elevated compared to historical norms.
The bank suggests that selling downside risk to generate carry over the next three months presents an attractive opportunity in the current market environment.
