Silver Price / Silver Poised for Gains, but Strong Dollar May Limit Rally
Key Points
HSBC expects silver prices to remain supported by recovering investor demand and strong gold trends, but shrinking market deficits, rising supply and a firm US dollar are likely to limit major rallies.
New Delhi, Oct 26: The global silver market is moving closer to balance following years of sizeable supply shortfalls, prompting expectations of steadier prices rather than explosive gains, with HSBC forecasting narrower deficits and a more constrained outlook for the precious metal.
The report noted that the global silver market recorded a deficit of 140 million ounces in 2025. However, the shortfall is projected to narrow significantly to 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.
Also read: Jio IPO Allotment Today: Here's What Every Investor Needs to Know
📱 Get Argus News App
✨HSBC highlighted that the easing supply gap supports price stability but is unlikely to trigger sustained upward momentum. It added that above-ground inventories and recycled silver supplies could eventually restrain sharp price increases and exert pressure on the market over the longer term.
Silver touched a record high of $121 per ounce on January 29, 2026, fuelled by surging gold prices, supply constraints, tariffs, and geopolitical and economic uncertainties that strengthened safe-haven demand.
The conflict in the Middle East further accelerated investor flows into the US dollar, while elevated oil prices raised concerns about tighter monetary policy amid weakening equity markets.
Despite these challenges, HSBC expects precious metals to retain investor interest. “Gold prices will likely remain influential, and we are moderately positive on bullion, which should help sustain silver,” it said.
The report also stated that renewed tariff concerns could trigger additional rallies in silver prices. However, industrial and jewellery demand is expected to remain under pressure.
While lower ore grades and mine closures are likely to affect supply this year, the impact could be largely offset by new mining projects and capacity expansions.
A separate report estimated that silver exchange-traded funds (ETFs) held assets worth about Rs 85,000-86,000 crore as of August, reflecting growing financialisation of precious metals, a broadening commodity derivatives market, and rising structural demand for industrial metals such as copper and aluminium.
(IANS)