Silver Price Faces Hawkish Fed Headwinds Amid Ongoing Supply Deficit

The silver market is sending mixed signals as investors weigh the impact of the Federal Reserve's hawkish tilt against the ongoing supply deficit. Spot prices have wobbled, but the metal's longer-term narrative remains anchored by a structural shortage that shows no signs of easing.

Despite the recent rate hike expectations, several major banks have trimmed their silver forecasts. JPMorgan cut its target to $60-$65 per ounce in early July, while UBS slashed its deficit estimate by 80% to just 60-70 million ounces. Commerzbank now sees silver at $67.

The supply crunch is expected to continue, with Metals Focus and the Silver Institute pegging the global deficit at 46.3 million ounces for 2026, the sixth consecutive year that mine production has failed to keep pace with demand. Industrial consumption, particularly in solar panels and electronics, remains a primary driver of this trend.

Some observers suggest silver may be due for a strategic reassessment, given its relative strength against gold and persistent deficit. Meanwhile, miners are reaping the rewards of robust demand, with Sotkamo Silver reporting a 151% jump in second-quarter revenue to 198 million Swedish kronor.