Silver prices may fall further as demand weakens: Analysts
Gold Corp. Silver bars stacked at the Perth Mint Refinery operated by Perth, Australia, February 5, 2026.
Matt Jelonek | Bloomberg | Getty Images
Silver’s dizzying rise in 2025 has created the conditions for demand to vanish among precious metal buyers, according to analysts who say prices could fall even further from last year’s highs.
The metal’s wide range of industrial purposes means it is more responsive to the economic cycle than gold, as a key component in goods ranging from computers to mobile phones, solar panels to cars.
UBS said in a note published May 22 that the nearly 140% increase in silver prices last year deterred buyers in various sectors and that high price levels began to pressure demand.
“As long as prices remain at current levels, demand erosion is likely to continue,” they wrote.
“Unlike gold, which benefits from strong central bank purchases, silver lacks this strategic demand pillar and is not included in official sector reserves. As a result, silver is more vulnerable to shifts in private investment and industrial demand and is likely to lag behind gold.”
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UBS believes that the current investment situation does not adequately reward investors in terms of the volatility involved and therefore remains an “unattractive” position for them.
Silver’s remarkable rise peaked on January 28 of this year, topping $120 an ounce before a massive drop of almost 30% in a single day.
Prices have recovered since hitting a 2026 low of $67.60 on March 20 but remain well below pre-Iran war levels.
Both spot silver and silver futures rose in May, trading around $87 per ounce on May 14, before another selloff saw prices consolidate around $75-$78 over the past two weeks.
spot silver It was last traded at $72.13 per ounce, down 3.7% on Thursday, while the front-month US silver futures It fell 3.7% to $72.16.
But analysts at HSBC say the metal is “fundamentally overvalued” and could separate from gold in its orbit.
“We believe further room for upside is limited as silver remains overvalued,” they wrote in a note published Thursday.
“Gold prices will likely continue to be influential, but we believe the gold:silver ratio will likely widen, allowing silver to unwind even as gold recovers.”
Macquarie analysts also think that a recovery in silver prices is unlikely.
Strategists think the Federal Reserve will raise interest rates in the first half of 2027, which will remove downward pressure on precious metal prices.
“While we expect average silver prices to remain at this level for the remainder of the year, volatility will continue until the situation in the Middle East is resolved, creating meaningful downside risk if the macro situation worsens further,” Macquarie analysts said in a note published May 21.
