Silver's $76 Surge: Geopolitical Tailwinds Linger as Bank Views Split on Structural Outlook

Silver rallied to $76.57 on US-Iran deal hopes, but HSBC predicts a drop to $68 by 2027 amid conflicting views on supply deficits and shifting demand from solar and AI.

The diplomatic thaw between Washington and Teheran pushed silver to a fresh high of $76.57 an ounce on Thursday, but the rally is exposing widening fault lines in how the market’s supply-demand balance is being read. One major bank is already calling for a retreat to $68 by 2027, while another sees $81 as the floor for next year.

Spot silver climbed 0.9% on May 21, bucking a session where both gold and platinum drifted lower. The move traced directly to President Trump’s statement that the US was in the “final phase” of a possible agreement with Iran. Brent crude, which had briefly touched $109 a barrel earlier in the day, slumped to close at $102.58. US Treasury yields and the dollar also eased, creating a rare double tailwind for silver: lower yields boost its appeal as a monetary metal, while cheaper energy cuts costs for the industrial applications that absorb more than half of global supply.

The optimism proved fragile. Within 24 hours, an Iranian official pushed back, insisting no deal had been reached and only “minor differences” remained. US crude futures promptly rallied more than a dollar, underscoring how tightly silver’s near-term trajectory is tied to the ebb and flow of the strait of Hormuz narrative.

Beyond the daily headlines, a more fundamental tug-of-war is taking shape. Industry analyses show the market heading for a sixth consecutive year of structural deficit. Since 2021, 762 million ounces have been drained from above-ground inventories. This year’s shortfall is pegged at 40.3 million ounces, and forecasts point to a widening to 46.3 million ounces in 2026, driven by demand from electronics, electric vehicles and solar technology.

HSBC is challenging that bullish narrative. The British bank expects the global deficit to nearly halve this year to 73 million ounces — a number that implies a far larger starting deficit than the industry estimate cited above, but one that HSBC believes will shrink further through 2027. Chief precious metals analyst James Steel cautioned that moderating shortages are not enough to sustain elevated prices. The bank sees silver averaging $75 in 2026 before slipping to $68 the following year.

On the demand side, high prices are already curbing consumption. Manufacturers are actively reducing their silver content, and the photovoltaic sector — a major growth driver in recent years — is expected to cut purchases by roughly a fifth year-on-year. That contraction is being partly offset by a surge in new applications. The explosive build-out of AI data centers and 5G infrastructure requires the metal’s superior electrical and thermal conductivity to cool and connect powerful chips.

Meanwhile, supply is responding to record incentive prices. Global production is set to hit a decade high this year, with recycled silver volumes breaking through the 200-million-ounce threshold for the first time since 2012. Even so, the market remains undersupplied for a sixth year, forcing continued draws on stockpiles.

J.P. Morgan Global Research sees a much more durable structural floor. The US bank forecasts an average of $81 an ounce for 2026, citing persistent physical shortages and uncertainty around global tariff policies that could further disrupt trade flows.

For now, silver’s price path remains hostage to the next headline from the Gulf. A durable accord would depress oil prices and inflation expectations, cap yields, and give the metal room to test higher ground. A breakdown in talks would reverse that mechanism, weighing on silver through the rate channel even as geopolitical anxiety lifts safe-haven demand. With the deficit both narrowing and deepening depending on which analyst you ask, the metal’s dual identity has rarely been more clearly on display.