Silver bullish on shaky ground? HSBC sees bullish H1 but warns of volatility, risks in second half of 2026

After delivering one of its most explosive rallies in recent history, silver prices seem to be entering a turbulent phase marked by sharp swings and shifting fundamentals. The white metal hit a record high of USD 83.60 an ounce at the end of December 2025, capping big gains in a year that saw prices nearly triple.

However, with the metal’s increasing volatility in 2026, the rally appears to be losing steam.

Silver’s meteoric rise was supported by a cocktail of supply tightening, speculative buying and safe-haven flows amid global macroeconomic uncertainty. But with the start of the new year, the market tone has become more cautious.

The price rally has intensified, and traders are beginning to reassess the sustainability of last year’s momentum as new supply emerges and demand-side cracks begin to appear.

Despite uncertainty surrounding silver prices, HSBC, in its latest report, presented a bullish outlook for the first half of 2026, driven by continued tightness in the physical market, firm investment demand and supportive macroeconomic factors.

The global investment bank raised its average price forecast for the year to USD 68.25/oz, expecting prices to trade in a wide range of USD 88 to 58/oz. Year-end target is USD 62/oz.

The bank points to a range of factors supporting silver in the near term. These include ongoing tightness in the London physical market, record-high lease rates and bearishness in CME futures, all of which indicate a shortage of deliverable silver.

Following a tariff-driven shift to 2025, a significant portion of silver reserves remain locked up in New York vaults and HSBC believes the move to London will not take place until the end of the year.

Additionally, HSBC’s FX research team predicts a softer US dollar in 2026, which generally supports demand for non-yielding assets such as silver. The metal is also expected to benefit from elevated geopolitical tensions, continued safe-haven demand through ETF inflows and strength in gold prices, which often have a spillover effect on silver investments.

However, the second half of the year could see a reversal of momentum, warns HSBC.

While the market remains tight for now, both mine production and recycling supply are expected to increase, and industrial demand, which accounts for a significant share of total silver consumption, is forecast to weaken.

The bank estimates the silver production/consumption deficit to narrow from 230moz in 2025 to 140moz in 2026 and narrow further in 2027.

Analysts at HSBC also flagged potential long liquidations in ETFs and net long positions on the CME, which could increase downside pressure if investor sentiment turns. The bank expects a gradual resolution of physical tightness and sees the possibility of a price correction in H2, especially if safe-haven flows wane or macro conditions change.

Also Read: In One Day Silver Price Rs. 10,000 decline Is the white metal rally in danger?

In summary, while silver prices will continue to be supported in the early part of 2026, HSBC believes that volatility will remain high, with increasing risks of a pullback in the second half of the year as supply improves and demand weakens.

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