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Investing.com -- UBS has lowered its silver price forecasts across multiple time horizons, citing weaker investment demand, softer industrial consumption, and higher mine supply.
The bank now forecasts silver prices for June-end at $85, down from a prior outlook of $100. The September target was trimmed to $85 from $95, the December target to $80 from $85, and the March 2027 forecast to $75 from $85.
Spot silver prices are currently trading around $73.80.
The revision comes following a reassessment of the market’s supply-demand balance. UBS now expects the 2026 silver market deficit to narrow to roughly 60–70 million ounces, a dramatic reduction from its previous estimate of around 300 million ounces.
“For 2026, we expect weaker demand from photovoltaics due to elevated prices; higher prices are also weighing on silverware and jewelry demand,” strategists Wayne Gordon and Dominic Schnider wrote in a note.
“Together, we estimate these channels to reduce demand by about 50mn oz,” they added.
On the supply side, the strategists see a “modestly stronger backdrop, with mine output expected to reach approximately 850 million ounces.
Commenting on investment demand, UBS highlighted that total known ETF holdings have dropped by nearly 70 million ounces to around 794 million ounces, and net speculative futures positions have pulled back to just above 100 million ounces.
In response, the bank cut its full-year investment demand estimate from above 400 million ounces to 300 million ounces, which it described as "still generous given year-to-date outflows."
“Consistent with the smaller deficit, we have trimmed our price outlook across all forecast horizons. In our base case, we expect silver to trade broadly sideways,” the strategists said.
Yet, UBS stopped short of more aggressive cuts, pointing to gold as a stabilizing force. "We still expect gold prices to trend higher, providing an important anchor for silver," the strategists said, adding that the gold-silver correlation has increased recently.
The bank expects the gold-silver ratio to drift toward around 75–80 over time.
Strategy-wise, UBS said it continues to favor selling volatility over holding outright long positions. Although implied volatility has come down significantly from earlier this year — when one-month realized volatility briefly approached 150% in February — it remains elevated relative to history.
"We view selling downside risk to harvest carry over the next three months as attractive," the bank said.
