Silver Market : Faces Strong Correction as Future Outlook Signals Gradual Decline
Silver Market: Silver prices witnessed a sharp correction during Thursday’s trading session, sending a clear signal that volatility has returned to the precious metals market. Investors who were riding the recent bullish momentum were caught off guard as prices slipped significantly within a short span of time. This movement highlights how quickly sentiment can change in commodity markets, especially when global demand trends and long-term forecasts begin to shift.
Sudden Drop in Domestic Silver Prices
During intraday trading, silver futures for March 2026 experienced a steep fall on the domestic commodities exchange. Prices declined by nearly Rs 10,000 per kilogram compared to the previous trading session. The contract opened lower than Wednesday’s close and continued to slide before stabilizing near midday levels. Even after partial recovery, silver remained well below its earlier closing price, reflecting continued selling pressure.
By noon, silver was trading lower by over two and a half percent, underlining the intensity of the correction. Such sharp intraday movements are often a result of profit booking after a strong rally, combined with changing expectations around future demand and supply.
Context of Recent Record Highs
This decline becomes more meaningful when viewed against the backdrop of silver’s recent performance. In December, international silver prices touched a record high of around $83.60 per ounce, driven by strong investor interest, supply constraints, and optimism around industrial usage. These elevated levels, however, also made silver vulnerable to correction once market participants began reassessing valuations.
High prices often discourage fresh buying, particularly from price-sensitive segments such as jewelry manufacturers and industrial users. As a result, even a small shift in outlook can trigger outsized reactions in the market.
Shifting Global Outlook for Silver Prices
According to recent assessments by major financial institutions, the long-term outlook for silver suggests a gradual cooling of prices rather than a continuation of the sharp rally seen in recent years. While the average price forecast for 2026 has been revised slightly upward to around $68.25 per ounce, projections beyond that period point toward a steady decline.
Estimates indicate that silver prices could fall to approximately $57.00 per ounce in 2027 and further soften to nearly $47.00 per ounce by 2029. These projections reflect expectations of easing demand pressures and improving supply dynamics over the medium to long term.
Weakening Industrial and Jewelry Demand
One of the primary reasons behind the cautious outlook is weakening demand from key consumption sectors. Industrial usage, which plays a crucial role in silver demand due to its application in electronics, solar panels, and manufacturing, is showing signs of slowing growth. As global economic conditions remain uncertain, many industries are optimizing costs and reducing raw material consumption.
Jewelry demand is also under pressure. Elevated prices over the past year have discouraged buyers, particularly in price-sensitive markets. Consumers are either postponing purchases or shifting to alternative materials, leading to reduced offtake from the jewelry segment.
Silver Deficit Expected to Narrow
Although the silver market is still facing a significant supply-demand gap, this deficit is expected to shrink over the coming years. In 2025, the global silver deficit is estimated to be around 230 million ounces. However, projections suggest that this gap could reduce to nearly 140 million ounces in 2026 and further narrow to about 59 million ounces by 2027.
A declining deficit typically reduces upward pressure on prices, especially when combined with subdued demand growth. This trend supports the view that silver may struggle to revisit its recent highs in the absence of a major demand-side catalyst.
Rising Supply Through Mining and Recycling
On the supply front, silver production is expected to improve gradually. Increased mining output, along with higher recovery from recycling activities, is adding to overall availability. Additionally, silver produced as a byproduct of other metal mining operations is contributing to supply growth without requiring dedicated silver-focused investments.
This improving supply outlook contrasts with earlier years when production constraints played a major role in supporting prices. As supply becomes more responsive, the market is better positioned to absorb demand fluctuations.
Role of Gold and Safe-Haven Demand
While gold continues to benefit from its status as a safe-haven asset during periods of economic uncertainty, silver does not always enjoy the same level of defensive demand. Silver’s dual role as both an industrial metal and a precious asset makes it more sensitive to economic cycles. With industrial and jewelry consumption slowing, silver’s reliance on investment demand alone may not be sufficient to sustain elevated prices.
Conclusion: Volatility Likely to Persist
The recent fall in silver prices serves as a reminder that commodity markets are highly dynamic. While long-term fundamentals still support silver as an important industrial and investment metal, near-term challenges related to demand softness and rising supply cannot be ignored. Investors and traders should remain cautious, closely tracking global economic indicators, industrial trends, and future supply developments. Volatility is likely to persist, making disciplined strategies and informed decision-making more important than ever.