UBS Lowers Silver 'Buy-the-Dip' Target to $48-50 Amid Tepid Investor Demand

UBS has lowered its recommended price range for buying silver during market pullbacks to $48-$50 per ounce, a downward revision from its previous target of $55. The adjustment reflects weaker-than-expected investment demand and a challenging macroeconomic environment that has pressured precious metals, according to a note from UBS strategist Dominic Schnider.

Silver prices have fallen sharply from $76 an ounce in early June to approximately $56 in mid-July. Schnider attributed the decline to escalating tensions in the Middle East and surging oil prices, which "have intensified concerns about higher interest rates and kept precious metals—including silver—under pressure."

Investment Demand Lags

The primary reason for the revised buying zone is that investment demand has been more "lackluster than initially expected," the bank stated. This trend is reflected in exchange-traded fund (ETF) data, which shows holdings have declined by more than 38 million ounces since the start of the year, settling at around 784 million ounces by mid-July.

However, UBS noted some recent signs of stabilization, with ETF holdings increasing by 1.86 million troy ounces in July. This suggests some investors may be taking advantage of the lower prices. Futures market positions have also remained broadly stable, according to the report.

Near-Term Headwinds and Fed Outlook

UBS anticipates that near-term pressures on silver will persist. The bank cited several headwinds for the metal, including geopolitical tensions, a firm U.S. dollar, and the higher opportunity cost of holding non-yielding assets in a high-interest-rate environment.

Ad

Furthermore, the strategist expects a hawkish stance from the Federal Reserve in the short term, with no interest rate cuts anticipated until December 2026 or the first quarter of 2027. "Silver faces a top-down backdrop that offers investors little impetus to increase long positions," Schnider wrote.

Long-Term Forecast Remains Positive

Despite the short-term caution, UBS believes any significant price weakness is likely to be "short-lived." The bank maintains a bullish long-term outlook, driven by eventual Fed rate cuts, a high valuation of the U.S. dollar versus Asian currencies, and industrial demand that may be less sensitive to price increases.

UBS provided the following price forecasts for silver:

• By September 2026: $65 per ounce
• By December 2026: $70 per ounce
• By June 2027: $75 per ounce

The bank also highlighted the gold-silver ratio, currently just above 70x, as making silver's relative value more appealing. A move above 80x, the note suggested, would signal even greater relative attractiveness for silver compared to gold.