Silver's Divergent Signals: UBS Cuts Deficit View as COMEX Inventories Drain

The silver market is sending mixed messages this week. After a brutal 5% slide on Tuesday that dragged the price to near $74 an ounce, the metal found a tentative footing on Wednesday, trading in a tight range between $75.20 and $75.82. Yet behind the daily price action, a more fundamental schism is emerging between two competing narratives: the accelerating physical drain from exchange stockpiles and a dramatic downward revision of the global supply deficit by one of the largest bullion banks.

The immediate headwind remains unmistakable. The Federal Reserve’s hawkish posture continues to weigh heavily on precious metals. With US inflation proving stubborn, markets have all but abandoned hopes for a rate cut in June. CME Group data now puts the probability of a reduction at essentially zero, and speculation of a rate hike before year-end is creeping back into the conversation. The Fed’s current target range of 3.50% to 3.75% is widely expected to remain intact when the next decision lands in mid-June – a meeting that will be chaired for the first time by Kevin Warsh, who is known for his restrictive monetary stance.

Bond markets are amplifying the pressure. The yield on the 10-year US Treasury note has climbed to 4.667%, while long-dated yields hit their highest level since 2007. Higher yields erode the appeal of non-yielding assets like silver, and the dollar’s strength – the dollar index hovering near 99 – adds another layer of drag for dollar-denominated commodities. The FOMC minutes due later today are the next catalyst; a hardline tone on inflation could test the $73 support level.

Geopolitical developments have added a twist of their own. Hopes for diplomatic progress in the Middle East, including US President Donald Trump’s recent hint at a potential nuclear deal with Iran, have dampened safe-haven demand. Oil prices eased as a result, stripping silver of part of its geopolitical premium. On the other hand, a recent ceasefire in the US-China tariff dispute is providing some support to the industrial demand side of the equation.

Should investors sell immediately? Or is it worth buying Silber Preis?

The supply story is becoming more nuanced. The Silver Institute still projects the sixth consecutive annual deficit for 2026 – a figure that has underpinned the structural bull case. And the physical evidence of tightness is hard to ignore: COMEX warehouse inventories have collapsed from 531 million ounces in autumn 2025 to roughly 315 million ounces, with massive outflows in the first two months of 2026 alone. Mine supply is notoriously inflexible, given that roughly 70% of silver is produced as a byproduct of gold, copper, and zinc mining.

But UBS has just thrown a wrench into the deficit narrative. The Swiss bank has slashed its global supply deficit forecast from 300 million ounces to the high double-digit million range – roughly 60 to 70 million ounces. The revision is rooted in a reassessment of demand: weaker offtake from the photovoltaic sector, declining jewelry and silverware purchases, and lower investor outflows. At the same time, UBS expects mine production to edge higher to around 850 million ounces in 2026. The bank now sees largely sideways trading for the remainder of the year, and has cut its end-2026 price target from $85 to $80, with an even sharper trim for Q2 2026 from $100 to $85.

Bulls can still point to significant institutional conviction. The analyst consensus still pegs fair value near $80, and some banks remain far more optimistic. Citigroup holds a second-half target of $110, while Bank of America sees the potential for much higher prices based on historical valuation ratios. The tension between these bullish long-term views and UBS’s bearish near-term revision is keeping the market in a state of flux.

Silber Preis at a turning point? This analysis reveals what investors need to know now.

Technically, the picture is shaky. The Relative Strength Index sits at 31, flirting with oversold territory, while the MACD remains negative. After breaking its uptrend channel, silver is eyeing support at $71, with resistance levels at $76.33 and $78.25 offering the first real hurdles for a sustainable recovery.

For now, all eyes are on the Fed minutes. Should they confirm a continued hardline approach to inflation, the $73 support – and ultimately the $71 floor – could face a severe test. The underlying physical shortage has not disappeared, but in a market increasingly dominated by macro forces, even a deep inventory drawdown may not be enough to spark the next leg higher on its own.

Ad

Silber Preis Stock: New Analysis - 20 May

Fresh Silber Preis information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.

Read our updated Silber Preis analysis...

en | XC0009653103 | SILVERS | boerse | 69384074 |