- Spot silver and silver futures prices have significantly corrected, with UBS, HSBC, and Macquarie Group collectively issuing cautious outlooks for the future, mainly due to suppressed industrial demand and potential tightening of macro monetary policy.
- After recording an increase of about 140% in 2025 and reaching a historic high above $120 per ounce on January 28, 2026, the silver market has seen a significant pullback from its highs. The high cost of raw materials is prompting industrial buyers to reduce purchases, and silver's unique industrial attributes are creating negative feedback on prices.
- Major investment banks generally expect limited upside for silver in the future, due to the lack of strategic buying support as a central bank reserve asset, and the possibility of the Federal Reserve raising interest rates in the first half of 2027. The gold-silver ratio is expected to further widen, with spot silver having fluctuated between $75 and $78 per ounce over the past two weeks, with a single-day drop of over 3.7%.
Industrial Demand Faces Price Erosion Effect
The significant rise in silver prices over the past year and a half has had a substantial negative impact on the downstream real economy chain. According to the latest industry research report by UBS, silver's extensive use in advanced industrial fields such as computers, mobile terminals, solar panels, and automotive manufacturing makes it far more sensitive to economic cycles and cost fluctuations than gold. UBS analysts clearly point out that as long as silver prices remain at current high levels, the phenomenon of demand erosion in the industrial sector may persist. Due to the lack of strategic continuous buying support from major global central banks as official reserve assets, silver price formation heavily relies on marginal changes in private investment demand and industrial consumption, which makes its risk resistance significantly weaker than gold during commodity cycle downturns.
Gold-Silver Ratio Forecast Faces Structural Expansion
HSBC's latest market outlook report released on Thursday indicates that the current asset valuation of silver is relatively high from a fundamental perspective, and future price trends are highly likely to diverge substantially from gold. The HSBC analysis team believes that due to the excessive valuation premium in the early stage, the space for further upward movement in silver prices in the short term is significantly constrained. Even in the context of global macro uncertainty driving gold prices higher, the gold-silver ratio is still expected to show an expanding trend. This means that silver's performance may significantly lag behind gold, and it may even experience an independent price decline when gold rises. Currently, the investment premium of silver is not sufficient to fully hedge against the potential risks brought by its high volatility, thus reducing its overall attractiveness to institutional investors.
Monetary Policy Long-Term Path Suppresses Precious Metal Valuation
From a macro policy cycle perspective, the suppression of non-profit assets by the forward interest rate path remains significant. Macquarie Group strategists predict in their latest research report that the Federal Reserve may start an interest rate hike cycle in the first half of 2027, and this potential liquidity tightening expectation is already exerting downward pressure on the precious metals market. Macquarie expects that during the remaining trading time of 2026, the average silver price may roughly remain near the current range. However, if global geopolitical risks such as the Middle East situation are substantially alleviated, the previous risk aversion premium in the silver market will face rapid compression; and once the macroeconomic environment further deteriorates, accelerated shrinkage in industrial demand will lead to a deeper correction in silver prices.
Key Technical Levels and Recent Market Performance
The sharp fluctuations in silver prices within the year reflect the intensification of market long-short games. This round of silver price rise cycle reached a historical peak on January 28, 2026, when spot prices briefly exceeded $120 per ounce, but then recorded a nearly 30% sharp decline in a single trading day. Subsequently, spot silver fell to an annual low of $67.60 per ounce on March 20, 2026, before launching a technical rebound. In mid-May, spot and futures prices once again surged to around $87 per ounce, but this immediately triggered a new round of institutional selling. As of the close on Thursday (May 28), spot silver was last reported at $72.13 per ounce, and near-month silver futures at $72.16 per ounce, with both experiencing a single-day decline of 3.7%, indicating a clear phase of pressure and volatility in the market.
