Silver slips 1.5% – Bank of America sees rebound potential

Silver is losing 1.5% today, extending the sharp selloff seen over the past few sessions. At the same time, Bank of America remains constructive on silver and still sees the potential for prices to reach USD 100 per ounce in Q4 2026, although the bank warns that such a rally would likely be temporary rather than sustainable. According to BofA analysts, the current bullish momentum in silver is being driven primarily by the ongoing rally in gold, geopolitical tensions, and limited liquidity in the physical silver market. Key takeaways

• However, the bank believes silver’s industrial fundamentals are beginning to weaken, with elevated prices becoming a major issue as manufacturers increasingly look for ways to reduce silver usage or replace it with cheaper alternatives.
• The biggest risk concerns the photovoltaic sector, which has been one of the main drivers of silver demand in recent years. According to BofA, demand from this segment may have already peaked in 2025.
• The bank also points to slowing solar panel production in China and a potential decline in new solar installations in 2026, which could limit further growth in industrial silver demand.
• High silver prices are putting significant pressure on solar manufacturers’ margins, accelerating the so-called “thrifting” process, where companies reduce the amount of silver used in industrial products.
• BofA estimates that the global silver deficit could shrink by as much as 90% this year, making the market increasingly vulnerable to moving into a supply surplus even after modest investor selling.
• The bank expects silver to gradually trade more like a precious metal rather than an industrial metal in coming quarters, implying stronger dependence on capital flows, investor sentiment, and monetary policy expectations.
• Despite its more cautious stance, BofA stresses that silver demand is unlikely to collapse sharply because the metal remains a critical component of the global green energy transition.
• The ongoing conflict with Iran continues to support investment in alternative energy and technologies aimed at reducing dependence on oil, indirectly supporting long-term silver demand.
• The bank also warns that silver prices may remain highly volatile. Earlier this year, silver briefly surged toward USD 120 per ounce as investors and industrial buyers competed for limited physical supplies.
• Another important source of risk remains trade negotiations between the United States, Canada, and Mexico. Since Canada and Mexico are major suppliers of silver to the U.S., potential tariffs or trade disruptions could once again tighten market supply conditions.

BofA also notes that despite elevated prices, physically backed silver ETF holdings continue to decline, while CFTC data shows limited appetite among speculative investors to significantly increase long futures positioning. The current silver market remains extremely sensitive to shifts in sentiment and capital flows, creating the potential for both sharp rallies and equally aggressive corrections in the coming months.

Source: xStation5