Silver’s Record Rally Continues: Analysts Predict Further 20% Upside by Q1 2026
Current Market Overview
Investors are witnessing an exceptional rally in silver, a leading asset this year, with no signs of slowing down. Strong demand coupled with supply constraints is projected to push prices even higher.
– Silver recently reached an all-time high of over $67 per ounce in international markets, having more than doubled in value in 2025.
– Analysts forecast that silver could increase by an impressive 20% by the first quarter of 2026, potentially hitting the $70-80 range by March.
– Overall, silver has appreciated over 127.5% in 2025.
What’s Driving Silver Prices Higher?
The relentless ascent in silver prices can be attributed to several key factors:
– Supply Constraints: A significant tightness in physical supply is being felt, especially in major markets like London and China. This has created a squeeze on supply, with rising exports to the U.S. exacerbating the situation.
– Increased ETF Demand: There has been an upswing in demand for silver-backed ETFs, which are fueling the pressure on physical supplies. According to Pranav Mer, vice president of commodity and currency research at JM Financial Services, the build-up of physical silver now corresponds to nearly two years of global consumption demand, largely driven by retail and high-net-worth individual (HNI) investments.
– Industrial Applications: Silver’s appeal extends beyond being a store of value; its growing use in technologies such as solar panels, electric vehicles, and artificial intelligence has significantly boosted demand.
Future Projections for Silver Prices
Anticipated Upside
Analysts believe the upside drivers for silver are likely to strengthen over the next few years:
– China’s Export Controls: Starting in 2026, China plans to restrict silver exports, further constraining a major global supply source.
– Persistent Supply Deficit: As noted by Naveen Mathur, director of commodities and currencies at Anand Rathi Share and Stock Brokers, while the supply deficit is expected to persist through 2026-2027, the pace of gains may moderate compared to 2025.
Short-Term Considerations
While the long-term outlook for silver appears robust, caution is advised in the near term:
– Market Volatility: Given silver’s historically high volatility, investors should approach current levels with care. Chainwala indicates that any signs of a U.S. recession or renewed concerns regarding an AI-driven market bubble could lead to sharp pullbacks.
– Consolidation Phase: Prices are anticipated to consolidate in the following weeks, particularly as trading volumes are likely to remain low due to holiday seasons and year-end market closures.
Conclusion
Silver’s remarkable rally shows no signs of abating, and analysts are optimistic about potential further increases, forecasting a 20% rise by Q1 2026. As the market navigates tight supply and increasing industrial demand, a buy-on-dips strategy could prove advantageous. However, due to inherent price volatility, investors should proceed with caution as we approach a pivotal phase in silver trading.