Silver prices are hovering near equilibrium levels and could draw support from recovering investor demand, but meaningful rallies are likely to be constrained by a firm US dollar and rising supply, according to a report released on Monday, 26 October 2026. The assessment, from HSBC Global Investment Research, points to moderating market deficits as the key reason the metal's upside appears capped for now.

Shrinking Deficit Signals Equilibrium

The HSBC report noted that the silver market recorded a deficit of 140 million ounces in 2025. That shortfall is forecast to narrow sharply to just 5 million ounces in 2026, before widening mildly 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 stated. Above-ground stocks and increased recycling activity could eventually cap sizable price advances and weigh on silver over the longer term.

Record High and the Safe-Haven Surge

Silver reached a record high of $121 per ounce on 29 January 2026, propelled by record gold prices, supply tightness, and a confluence of tariff, geopolitical, and economic concerns that fuelled safe-haven buying. The ongoing Middle East conflict triggered a flood of capital into the US dollar, while elevated oil prices stoked fears of tighter monetary policy as global equities slumped — together creating a perfect storm for precious metals.

Gold's Influence and Tariff Risk

The HSBC report acknowledged that gold prices will likely remain a key driver for silver. 'Gold prices will likely remain influential, and we are moderately positive on bullion, which should help sustain silver,' it said. On the demand side, the bank warned that industrial and jewellery demand will continue to weaken, even as any resumption of tariff concerns could trigger further short-term rallies.

On the supply side, lower ore grades and mine closures this year are expected to be largely offset by new projects and facility expansions, keeping the overall supply trajectory on an upward path.

Silver ETFs and Growing Financialisation

A separate recent report highlighted that Silver ETFs in India held approximately ₹85,000–86,000 crore as of August 2026, underscoring the growing financialisation of precious metals in the country. The data also pointed to an expanding commodity derivatives market and rising structural demand for industrial metals such as copper and aluminium as contributing factors to the broader commodities narrative.

This comes amid a broader recalibration in global commodity markets, where investors are increasingly treating silver as both an industrial input and a financial hedge — a dual role that complicates any single-direction price forecast. With the deficit narrowing and supply recovering, the metal's trajectory in the remainder of 2026 will likely hinge on the dollar's strength and the pace of global industrial recovery.