Silver Targeted by Institutional Bears: UBS Warns of Shrinking Demand, HSBC Calls it "Overvalued Fundamentally"

As of May 28, the silver market is grappling with dual headwinds: cooling demand and persistent price pressure, with multiple institutions flagging that the "aftershocks" of the 2025 silver price surge are now taking hold. Silver touched a high of $120 per ounce on January 28 before tumbling nearly 30% in a single session. While there was a subsequent bounce, the broader trend has remained downward. After hitting roughly $87 on May 14, the metal came under renewed selling pressure. Over the past two weeks, it has traded mostly in the $75–$78 range, and Thursday saw it drop more than 3.5% to around $71.98. In a recent report, UBS pointed out that the roughly 140% price increase in 2025 has significantly dampened downstream industrial demand, warning that demand contraction could persist as long as silver holds at current levels. The bank also noted that unlike gold, which benefits from central bank purchases, silver lacks a strategic demand anchor and is therefore "unattractive" in today’s market environment. HSBC similarly views silver as fundamentally overvalued with limited upside potential. It forecasts that the gold-silver ratio will widen further going forward, leading to relative weakness in silver prices. Macquarie, from a macro standpoint, holds a more negative outlook: it expects the Federal Reserve to raise interest rates again in the first half of 2027, a move that will pressure precious metals overall. The bank warns that significant downside risk looms for silver if macro conditions deteriorate further.