Silver prices outlook: UBS updates its price targets

UBS strategists have raised their silver price forecast to $42/oz through June 2026, up from $38/oz, citing stronger investment demand, a recovery in industrial activity, and an anticipated weaker U.S. dollar. The bank notes increased speculative positions, solid ETF inflows, and a fifth consecutive annual supply deficit, reinforcing their bullish outlook. UBS maintains its long silver preference, viewing price pullbacks as attractive buying opportunities.

Analysis

UBS strategists have upgraded their silver price forecast to $42/oz through June 2026, reinforcing a strongly bullish stance on the metal. This revision is underpinned by a confluence of factors, including robust investment demand and a recovery in industrial consumption. Speculative interest is surging, with net long positions in futures increasing by 96 million ounces since late 2024 to a total of nearly 297 million ounces, complemented by solid ETF inflows that have brought total holdings to 786 million ounces. While U.S. retail demand has contracted by an estimated 30% year-to-date, this is offset by strength in India and a rebound in Europe. The fundamental picture is further tightened by a structural supply deficit; the market is projected to be in its fifth consecutive annual deficit in 2025, estimated at 118 million ounces, bringing the cumulative shortfall since 2021 to approximately 796 million ounces against a modest mine output increase of 1.9% expected this year. The primary macro driver for this outlook is the anticipated weakness in the U.S. dollar, with which silver holds a strong negative correlation. Silver's 34% year-to-date gain, outperforming both gold and palladium, highlights its current momentum.

Key Decisions for Investors

• Given the strong fundamental support from a persistent supply deficit and robust investment flows, investors should consider maintaining or initiating long exposure to silver.
• A tactical approach of buying on price pullbacks may be prudent, as the UBS report specifically identifies dips to $37.25/oz or below as attractive entry points.
• Investors should closely monitor the trajectory of the U.S. dollar, as its continued weakness is a crucial component of the bullish thesis.
• For those employing options strategies, the report's observation of historically benign volatility suggests that selling downside risk could be an effective way to generate yield while maintaining a long directional view.