Silver rally on shaky ground? HSBC sees bullish H1 but warns of volatility, risks in second half of 2026

After delivering one of its most explosive rallies in recent history, silver prices appear to be entering a turbulent phase marked by sharp swings and shifting fundamentals. The white metal soared to a record high of USD 83.60 an ounce in late December 2025, capping a year of outsized gains that saw prices nearly triple.

However, the rally seems to be losing steam, with the metal witnessing heightened volatility in 2026.

Silver’s meteoric rise was supported by a cocktail of supply tightness, speculative buying, and safe-haven flows amid global macroeconomic uncertainty. But with the start of the new year, the tone in the market has turned more cautious.


Price swings have intensified, and traders are beginning to reassess the sustainability of last year’s momentum as fresh supply emerges and demand-side cracks begin to show.

Despite the uncertainty around silver prices, HSBC, in its latest report, projects a bullish view for the first half of 2026, driven by persistent tightness in the physical market, firm investment demand, and supportive macroeconomic factors.

The global investment bank has raised its average price forecast to USD 68.25/oz for the year, expecting prices to trade in a wide range of USD 88 to 58/oz. The year-end target stands at USD 62/oz.

The bank points to a range of factors supporting silver in the near term. These include ongoing tightness in the London physical market, record-high lease rates, and backwardation in CME futures, all of which suggest a shortage of deliverable silver.

A significant portion of silver stockpiles remains locked in New York vaults following tariff-driven shifts in 2025, and HSBC believes the migration of these holdings back to London may not occur until later in the year.

In addition, HSBC's FX Research team forecasts a softer US dollar in 2026, which typically supports demand for non-yielding assets like silver. The metal is also expected to benefit from elevated geopolitical tensions, continued safe-haven demand via ETF inflows, and strength in gold prices, which often have a spillover effect on silver investment.

However, the second half of the year could see a reversal in momentum, HSBC warns.

While the market remains tight for now, mine production and recycling supply are both expected to rise, and industrial demand, which accounts for a significant portion of total silver consumption, is forecast to weaken.

The bank estimates that silver’s production/consumption deficit will narrow from 230moz in 2025 to 140moz in 2026, and fall further in 2027.

HSBC’s analysts also flagged potential long liquidation in ETFs and net long positions on the CME, which could increase downside pressure if investor sentiment turns. The bank expects a gradual resolution of physical tightness and sees the possibility of a price correction emerging in H2, especially if safe-haven flows wane or macro conditions shift.

Also read: Silver prices plunge Rs 10,000 in a day. Is the white metal’s rally at risk?

In summary, while silver prices may continue to find support in the early part of 2026, HSBC believes volatility will remain high, with growing risks of a pullback in the latter half of the year as supply improves and demand cools.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)