Silver Gets Hammered From Two Sides as India and UBS Rewrite the Bull Case

Silver plunges 9.12% to $77.55 after India doubles import duty to 15% and UBS cuts its global supply deficit estimate by 80%, with Fed rate outlook adding further pressure.

The white metal found itself caught in a pincer movement on Friday, with a surprise tariff hike from New Delhi compounding the damage from a dramatic downward revision to the global supply deficit by UBS. Silver crashed 9.12 percent to close at $77.55 an ounce, testing its 50-day moving average and wiping out weeks of gains. From its late-January record above $117, the metal now sits more than a third lower.

India more than doubled its import duty on silver to 15 percent, reversing the cuts it made in 2024. The new levy combines a basic customs duty with an agricultural infrastructure development cess. The government acted after silver imports surged 44 percent last year to top $9 billion, while record gold purchases in January pushed the trade deficit to a three-month high. New Delhi is trying to shield the rupee, but industry groups are already warning that higher official duties will revive smuggling routes.

That regulatory blow landed on a market already reeling from a seismic shift in supply-demand math. UBS analysts Wayne Gordon and Dominic Schnider slashed their estimate of this year's global silver deficit from roughly 300 million ounces to just 60-70 million — an 80 percent cut that effectively dismantles the tight-supply narrative. Their reasoning: elevated prices have started to curb demand from solar manufacturing, silverware and jewelry. Meanwhile, known ETF holdings have fallen by nearly 70 million ounces, leading UBS to pare its investment demand estimate from over 400 million to 300 million ounces.

The bank's price targets now cascade downward: $85 for the current quarter and September, $80 by year-end, and $75 by March 2027. Not all analysts agree — Citigroup sticks to a $110 target for the second half, and Bank of America expects a 2026 average near $86 — but the divergence among top houses is unusually wide.

Macro headwinds are making the task even harder. The Federal Reserve has priced out any rate cuts for this year, with some traders even betting on a hike by December. Strong U.S. inflation, fueled by the Strait of Hormuz blockade, leaves the central bank little room to pivot. Rising Treasury yields — the 10-year note topping 4.5 percent — and a stronger dollar are drawing capital away from non-yielding assets. Gold fell 2.61 percent on Friday to $4,555.80, and the current environment suggests further pressure before any relief.

The structural underpinning for silver remains in place — a sixth consecutive year of supply deficit has drained global inventories by hundreds of millions of ounces, and industrial demand from solar and electronics continues to grow. But the market is now testing its 50-day support near $77, and a clean break below that level could open the door to the mid-$70s. Should that support hold, resistance around $85 comes back into focus.

UBS itself concedes that strong gold prices should provide a floor for silver, projecting the gold-silver ratio to settle between 75 and 80. Yet with the FOMC meeting on June 16-17 looming and the Hormuz crisis unresolved, the short-term path for silver looks precarious. The combination of a hawkish Fed, a tariff shock from Asia's biggest silver buyer, and a radical supply revision from one of the most influential banks has left investors scrambling for a new entry point.