Silver Market Torn Between Hawkish Fed and Structural Deficit
The silver market is currently caught between two opposing forces: a hawkish signal from the Federal Reserve and a structural supply deficit that refuses to loosen its grip. The Fed's decision to hold interest rates steady, with a 9-to-3 voting split, has investors bracing for the possibility of further tightening. This has inflated the opportunity cost of holding non-yielding assets like silver, causing the metal to feel the pressure.
The recent price action has prompted a wave of target revisions from major banks, with JPMorgan trimming its forecast to $60-$65 and UBS slashing its deficit estimate by 80%. However, institutions remain divided on their predictions, with Citi holding firm at $110 and Goldman Sachs seeing a range of $85-$100.
The fundamental picture remains consistent, with metals Focus and the Silver Institute projecting a global deficit of 46.3 million ounces for 2026, the sixth consecutive year of shortfall. Mining output is barely keeping pace, and the gap is being driven largely by industrial demand that shows no signs of abating.