Silver likely to see upside from near-equilibrium levels, rallies capped by firm USD

New Delhi: Silver prices are near equilibrium levels and may receive support from recovering investor demand, but rallies are likely to be capped by a firm US dollar and rising supply, a report said on Monday.

The report from HSBC Global Investment Research said the silver market recorded a deficit of 140 million ounces in 2025. It forecasted that the shortfall will narrow sharply to 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 said.

Above-ground stocks and recycling may eventually help cap sizable rallies and weigh on prices longer-term.

Silver reached a record high of $121 per ounce on January 29, 2026, driven by record gold prices, supply tightness, and tariff, geopolitical and economic concerns, all of which fostered safe-haven buying.

The Middle East conflict triggered a flood into the USD, and high oil prices sparked concerns over tighter monetary policy as equities slumped.

“Gold prices will likely remain influential, and we are moderately positive on bullion, which should help sustain silver,” it said.

The report forecasted that resumption of tariff concerns could trigger further rallies, while industrial and jewellery demand will continue to weaken. Lower ore grades and mine closures this year will be largely offset by new projects and facilities expansion.

Another recent report said Silver ETFs held about Rs 85,000–86,000 crore as of August, while, highlighting growing financialisaton of gold, an expanding commodity derivatives market and rising structural demand for industrial metals such as copper and aluminium.

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