economy
Silver could fall further after latest slump, analysts say as they warn of demand destruction
Silver's rally of over 140% last year is deterring buyers in various industries and its elevated price levels are beginning to weigh on demand, UBS said.
TL;DR
- Silver's rally of approximately 140% last year has led to demand erosion among industrial buyers.
- Analysts from UBS and HSBC believe silver is fundamentally overvalued and could fall further.
- Silver's industrial uses make it more sensitive to the economic cycle than gold.
- Unlike gold, silver does not benefit from robust central bank buying and lacks a strategic demand anchor.
- UBS considers silver an "unappealing" investment due to its volatility and insufficient reward.
- Silver prices experienced a significant drop from highs, recovering partially but remaining below pre-war levels.
- HSBC expects the gold:silver ratio to widen, suggesting silver could ease even if gold rises.
- Macquarie analysts anticipate the Federal Reserve hiking interest rates in early 2027, potentially pressuring precious metal prices.
- Volatility in silver prices is expected to persist until the Middle East situation is resolved, with downside risk if the macro situation deteriorates.