UBS has lowered its silver price targets after reassessing the metal’s supply-demand outlook and concluding that the market deficit will be far smaller than previously expected. In a note cited by Investing.com, strategists Wayne Gordon and Dominic Schnider said weaker investment demand, softer industrial consumption, and a modest increase in mine supply are likely to limit silver’s upside over the coming quarters. The bank now forecasts silver at $85 per ounce by the end of June 2026, down from its previous target of $100 per ounce. Its September 2026 target was also cut to $85 from $95, while the December 2026 forecast was reduced to $80 from $85. Looking further out, UBS lowered its March 2027 target to $75 from $85. Spot silver was recently trading near $73.80.
The key reason for the downgrade is UBS’s revised expectation for the 2026 silver market deficit. The bank had previously projected a shortfall of around 300 million ounces, but it now expects that gap to narrow sharply to just 60 million to 70 million ounces.UBS said this change reflects a more balanced market than it had previously anticipated. With the supply-demand imbalance now expected to be much smaller, the bank no longer sees the same level of upside potential across its forecast horizons.“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.
A major factor behind the narrower deficit is weaker demand from industrial and consumer sectors. UBS said elevated silver prices are beginning to curb consumption in photovoltaics, a key source of industrial demand tied to solar panel production. At the same time, higher prices are also reducing demand for silverware and jewelry. Gordon and Schnider estimated that these areas together will cut silver demand by around 50 million ounces in 2026.“For 2026, we expect weaker demand from photovoltaics due to elevated prices; higher prices are also weighing on silverware and jewelry demand,” the strategists wrote.
UBS also highlighted a significant weakening in investment demand, which has become another major headwind for silver prices. The bank said total known ETF holdings have declined by nearly 70 million ounces to around 794 million ounces, while net speculative futures positioning has fallen to just above 100 million ounces. As a result, UBS reduced its full-year investment demand estimate to 300 million ounces, down from more than 400 million ounces previously. The strategists noted that even this revised figure may still be optimistic given the scale of year-to-date outflows. This decline in investor positioning is especially important because investment demand had been one of the main pillars supporting a more bullish silver outlook.
On the supply side, UBS expects a slightly stronger backdrop, which further reduces the likelihood of a large market shortage. The bank projects 2026 mine output at roughly 850 million ounces. Although the increase in supply is not dramatic on its own, it adds to the overall easing of the market balance when combined with weaker demand trends. This modest supply growth is another reason UBS believes silver prices are unlikely to break significantly higher in its base case.
Despite the lower silver targets, UBS did not turn outright bearish on the metal. The bank said gold should continue to provide support, helping stabilize silver prices even as silver-specific fundamentals weaken.UBS expects gold prices to trend higher and sees that strength anchoring silver. It also noted that the correlation between gold and silver has risen recently. Over time, the bank expects the gold-silver ratio to move toward 75 to 80. That gold-linked support is one reason UBS sees silver moving sideways rather than suffering a much deeper decline.
In terms of trading strategy, UBS said it prefers selling volatility rather than holding outright long positions in silver. While implied volatility has dropped from the extreme levels seen earlier this year, it remains elevated by historical standards. The strategists pointed out that one-month realized volatility nearly reached 150% in February. Although it has since fallen, current levels still offer opportunities for investors looking to harvest carry.“We view selling downside risk to harvest carry over the next three months as attractive,” the analysts said.
Overall, UBS’s revised silver outlook reflects a market that appears less tight than previously thought. A much smaller supply deficit, weaker investment flows, slower industrial demand, and slightly stronger mine production have all combined to reduce the bank’s confidence in further strong gains. While gold may continue to provide an underlying floor for prices, UBS now believes silver is more likely to trade in a broad range than stage a sustained rally. For investors, that means the focus may shift away from bullish directional bets and toward strategies designed to benefit from ongoing volatility in a market with more limited upside.