①According to a report by the Silver Institute, silver prices are consolidating at the high range of $80 per ounce. Although lower than the historical high last month, the long-term upward trend is supported by strong fundamentals; ②the report forecasts that the silver market will experience a structural supply shortage for the sixth consecutive year in 2026, with a deficit as high as 67 million ounces, primarily due to ongoing supply and demand imbalances.
$XAG/USD (XAGUSD.FX)$ Price volatility has recently begun to ease, currently consolidating at the high range of $80 per ounce. Although market prices remain far below the historical high set last month, the long-term upward trend continues to be supported by strong fundamentals, according to the latest report from the Silver Institute.
The report highlights that the strongest fundamental support for silver prices comes from the ongoing supply and demand imbalance, which is expected to persist until 2026, marking the sixth consecutive year of structural supply shortages in the silver market. According to the Silver Institute, the deficit is projected to reach 67 million ounces.
Analysts noted in the report: "The fundamental drivers supporting the strength of silver prices throughout most of 2025 have remained solid since the beginning of this year. These factors include tight physical supplies in London, geopolitical tensions, uncertainty surrounding U.S. policies, and concerns about the independence of the Federal Reserve."
"As of February 9, silver prices have risen 11% in 2026. Demand for silver coins and bars has strengthened in recent months, while global holdings of exchange-traded products (ETPs) are estimated at 1.31 billion ounces," the report added.
The Silver Institute pointed out that investment demand is expected to become the primary driver of price increases this year, as slowing economic activity impacts industrial consumption. Meanwhile, rising prices are also expected to suppress jewelry demand.
The report stated: "Physical investment is forecasted to grow by 20%, reaching the highest level in three years at 227 million ounces. After three consecutive years of decline, physical investment in Western markets is expected to recover in 2026, as silver's outstanding price performance and continued macroeconomic uncertainties rekindle investor interest. Against the backdrop of optimistic investor sentiment, investment demand in India may continue to grow following a significant increase last year."
Meanwhile, industrial demand is projected to decline by 2%, falling to approximately 650 million ounces, the lowest level in four years. The solar energy sector will face the greatest impact, as companies continue to reduce silver usage or seek alternatives for photovoltaic solar panels. Nevertheless, despite the decline in consumption within the solar energy industry, the broader electrification of the global economy is expected to support silver's overall industrial demand.
The report noted: "Various applications of silver continue to benefit from favorable structural growth trends. In particular, expansions in data centers, artificial intelligence-related technologies, and the automotive industry are expected to support silver consumption across a range of industrial end-uses, partially offsetting the decline in photovoltaic-related demand."
Silver jewelry, another key pillar of the market, is projected to decline for the second consecutive year, falling by 9% to 178 million ounces, the lowest level since 2020.
The report stated, 'Similar to the situation in 2025, record-high prices are expected to suppress consumption in most major markets, with India being the most affected. China will be the main exception, with demand projected to grow slightly, supported by product innovation and increasing popularity of silver-plated jewelry.'
The World Silver Council concluded that although demand in certain market segments is expected to weaken, overall demand is still forecasted to exceed supply.
Analysts at Standard Chartered Bank noted in a report, 'Outflows from silver ETFs have made silver susceptible to volatility in the short term, necessitating close monitoring; however, undersupply in the market suggests that silver prices may recover in the coming months.'
Editor/KOKO
