Silver is trading well below its early-October level as the market weighs a tightening physical balance against a macro backdrop that favours higher interest rates. According to Equiti market analyst Yazeed Abu Summaqa, silver has fallen from above $60 at the beginning of October towards $51, losing around 14% during the month and underperforming gold. The market is still expected to record a sixth consecutive annual supply deficit.
The latest decline accelerated after US GDP expanded at an annualised rate of 3.4% in the third quarter while PCE inflation remained elevated. Equiti notes that these figures suggested the economy can withstand restrictive policy and gave the Fed less reason to rule out another rate increase in December. Silver is more exposed to this outcome than gold, because neither metal provides income and both tend to lose appeal when rates rise.
Silver also carries the added risk that tighter credit, higher energy prices and weaker capital spending could eventually slow industrial activity. The gold-to-silver ratio has widened from below 70 at the end of September to around 78. Equiti interprets this as a sign that investors have not abandoned precious metals but have become more selective.
Gold has benefited from geopolitical uncertainty and central-bank demand, while silver investors are demanding a larger discount for its industrial exposure and higher volatility. The World Silver Survey expects total silver demand of approximately 1.11 billion ounces in 2026 against supply of around 1.07 billion ounces, implying a shortfall of 46.3 million ounces. This gap is being filled by metal accumulated in previous years, including above-ground bullion, exchange warehouses, investor holdings and recycled material.
COMEX warehouses held close to 336 million ounces on 28 October, including roughly 105 million ounces registered for delivery. Registered stocks had increased over the previous month, which Equiti notes indicates that the futures market was not facing an immediate shortage of deliverable metal. Mine production is forecast at approximately 844 million ounces this year, little changed from 2025.
Equiti points out that most silver is produced as a by-product of mining lead, zinc, copper and gold, and that only a minority of global output comes from mines developed primarily for silver. As a result, higher prices cannot quickly create new mine supply, and falling prices do not immediately remove a large amount of output. Industrial silver demand is expected to decline by 3% to approximately 640 million ounces in 2026.
Equiti attributes this mainly to thrifting, as solar manufacturers reduce the amount of silver required per unit of output in response to high prices. Data centres, AI, electric vehicles and grid investment are moving in the opposite direction, and silver remains important in electrical contacts, connectors, power systems and semiconductors because of its high conductivity. Equiti argues these sectors improve the longer-term demand outlook but are not yet large enough to offset the decline in solar use.
Physical coin and bar demand is forecast to rise to around 258 million ounces this year, while futures and exchange-traded investment have been less supportive during the recent correction. Speculative positioning in COMEX silver has moved close to the lower end of its two-year range, according to CFTC data cited by Investing.com. This reduces one source of forced selling but also leaves more short positions that may need to be closed if the monetary outlook changes.
Equiti highlights that Treasury yields declined during parts of the technology selloff, yet silver continued to fall. The analysis suggests that the reason for lower yields matters: bond buying driven by fears of weaker growth does not automatically benefit silver, whereas yields falling because of softer inflation and a reduced probability of further Fed tightening would lower the opportunity cost of holding the metal. A softer Fed signal could bring ETF buyers back, encourage futures traders to rebuild long positions and force some bearish investors to buy contracts to cover shorts.
The article does not provide a specific price target. Its central argument is that silver is testing whether physical tightness, driven by a sixth consecutive annual deficit and slow mine supply, can outlast the pressure from a Fed that may keep rates elevated. Sources: Equiti market insights analysis by Yazeed Abu Summaqa; World Silver Survey (2026 demand and supply estimates); Datatrack (COMEX warehouse data); Investing.com (CFTC speculative positioning); Trading View (gold-silver ratio); Trading Economics (silver and 10-year US Treasury yields).
Source: equiti.com