Despite the possibility of silver climbing to $100 an ounce before the end of 2026, analysts at Bank of America believe the metal’s upward trajectory may prove difficult to maintain over the longer term.

In a recent precious metals outlook, a research team led by Michael Widmer, Head of Metals Research at Bank of America, projected that silver could revisit the $100 mark during the fourth quarter, largely supported by a strong gold market. However, the bank cautioned that the underlying fundamentals do not support a prolonged period of outperformance.

According to the analysts, silver’s industrial demand profile is beginning to change as elevated prices encourage manufacturers to reduce usage or explore lower-cost alternatives. This trend is particularly evident in the solar photovoltaic sector, one of silver’s largest sources of industrial consumption.

Bank of America believes demand from solar applications likely reached its peak in 2025, driven by a combination of cost pressures, efforts to improve material efficiency, and slowing growth in China’s solar production. The bank also expects global solar installations to moderate this year. While demand from other industrial sectors is forecast to rise, these gains are not expected to offset weakness in solar-related consumption.

As a result, the market’s structural deficit could shrink significantly. Analysts estimate that the supply shortfall may contract by as much as 90% in 2026, leaving the market vulnerable to even modest investor selling. Under such circumstances, silver could easily move back into surplus territory.

The report notes that soaring silver prices have placed considerable pressure on manufacturers, accelerating efforts to engineer products that require less of the metal. This shift could fundamentally alter the demand outlook over the coming years.

Looking further ahead, Bank of America expects silver prices to retreat from projected highs, forecasting an average price closer to $75 an ounce by the second quarter of 2027.

With industrial demand growth slowing, the bank believes investment flows will increasingly dictate silver’s price direction. In this scenario, silver may begin trading more like a traditional precious metal rather than an industrial commodity.

The metal has recently outperformed gold, supported by persistent supply deficits that are now expected to continue for a sixth consecutive year. Gold, meanwhile, has faced headwinds from higher interest rates and expectations of additional monetary tightening, factors that increase the opportunity cost of holding non-yielding assets.

The gold-to-silver ratio currently remains near the midpoint of its recent trading range, reflecting a relatively balanced relationship between the two metals.

Although the bank has adopted a more cautious stance, it acknowledges that silver remains indispensable to several clean-energy technologies. Demand is expected to remain resilient rather than collapse, even as higher prices encourage greater efficiency.

Geopolitical tensions are also contributing to the outlook. The ongoing conflict involving Iran continues to reinforce investment in renewable energy and alternative power sources, indirectly supporting silver demand.

At the same time, analysts warn that the silver market remains susceptible to sharp price swings due to limited liquidity. Earlier this year, silver surged to nearly $120 an ounce as investors and industrial users competed for increasingly scarce physical supplies.

Another key uncertainty lies in North American trade negotiations. As the United States, Canada, and Mexico revisit regional trade agreements, the silver market could experience additional volatility. Since Canada and Mexico are among the largest suppliers of silver to the U.S., any disruption or uncertainty surrounding trade policies has the potential to tighten supply conditions.

The bank noted that concerns over tariffs and trade restrictions have already prompted market participants to hold larger inventories within the United States, reducing the volume of metal available elsewhere. These dynamics helped push silver back above $80 an ounce, even as holdings in physically backed exchange-traded funds continued to decline and speculative participation in futures markets remained subdued.

While Bank of America sees room for silver to rally further in the near term, it maintains that sustained gains beyond the $100 level will depend less on industrial demand and more on investor appetite in an increasingly complex global market.

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