UBS has cut its silver price forecasts across multiple timeframes after revising its view of the metal's supply-demand balance. The bank now projects silver at $85 per ounce at the end of June, down from a prior $100 target, and has lowered its September forecast to $85 from $95. Its December outlook was trimmed to $80 from $85, while the March 2027 projection was reduced to $75 from $85.
Spot silver is trading near $73.80 as the bank implements these adjustments.
Supply and demand reassessment
UBS reported a significant change in its 2026 market deficit estimate, narrowing it to roughly 60-70 million ounces from an earlier estimate of about 300 million ounces. The strategists responsible for the note cited weaker demand from photovoltaic applications driven by elevated prices, and added that higher prices are also weighing on demand for silverware and jewelry.
“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.
The pair added: “Together, we estimate these channels to reduce demand by about 50mn oz.” On the supply side, UBS now anticipates mine output of approximately 850 million ounces, which supports the view of a slightly stronger supply backdrop.
Investment flows and positioning
UBS highlighted a pullback in investment holdings and speculative positions. Known ETF holdings have declined by nearly 70 million ounces to around 794 million ounces. At the same time, net speculative futures positions have retreated to just above 100 million ounces.
In response to these flows, the bank trimmed its full-year investment demand estimate from above 400 million ounces to 300 million ounces, a level the strategists described as “still generous given year-to-date outflows.”
Price outlook and drivers
Reflecting the smaller expected deficit, UBS cut price targets across all forecast horizons and said that in its base case “we expect silver to trade broadly sideways.” Nonetheless, the report stopped short of more severe downgrades by citing gold as a supportive influence. “We still expect gold prices to trend higher, providing an important anchor for silver,” the strategists wrote, noting that the gold-silver correlation has increased recently.
UBS expects the gold-silver ratio to trend toward around 75-80 over time.
Strategy recommendations
Regarding positioning, UBS prefers selling volatility to holding outright long silver exposure. The bank observed that implied volatility has fallen materially from earlier in the year - when one-month realized volatility briefly approached 150% in February - yet said volatility remains elevated relative to historical norms. “We view selling downside risk to harvest carry over the next three months as attractive,” the strategists concluded.
The combination of weaker physical demand in some industrial channels, softer investment flows, and a modestly stronger mine supply underpins UBS's more cautious price stance and its tactical guidance on volatility strategies.