UBS sees limited upside for silver prices over the next 12 months

Investing.com -- Silver prices are likely to remain volatile but offer limited upside over the next year, according to strategists at UBS, who expect the metal to stabilize slightly above current levels after a sharp rally and recent geopolitical-driven swings.

"Silver prices, like gold, have been volatile during the U.S.-Israel conflict with Iran and Iran’s retaliation against neighboring countries," strategists Dominic Schnider and Wayne Gordon said in a note. 

Spot silver was trading at around $84.2 per ounce as of 11:08 GMT on Thursday.

The precious metal briefly approached $100 per ounce following the escalation before retreating below $85, highlighting what UBS described as silver’s "limited value as a long-term hedge."

Recent volatility in silver has been extreme, with realized volatility over the past one to three months around 100%, while options markets suggest forward volatility of roughly 70% to 80%. The strategists noted that such levels are “comparable to or exceeding that of Bitcoin,” reflecting the uncertainty surrounding the metal’s valuation.

The bank expects prices to settle around $85 per ounce and maintains its broader outlook, projecting a peak near $100 per ounce in mid-2026 before easing back toward $85 by March 2027.

Despite the recent price surge, strategists said positioning data suggests investors are becoming less enthusiastic about silver. “Fewer ETF long positions and lower Comex open interest indicate silver is not preferred in uncertain times,” they wrote.

"Even gold typically experiences short-lived price effects during such events, as seen during the first Gulf War," Schnider and Gordon added. 

Fundamentally, UBS still expects the market to remain undersupplied, estimating a deficit of roughly 300 million ounces. However, it warns that some downside risks remain if industrial or jewelry demand weakens, particularly given the strong rally that has already seen silver prices nearly triple since early 2025.

Overall, while the outlook for mid-2026 remains constructive, “over the next 12 months, projected returns are less attractive based on our long-term forecast of $85/oz,” the strategists said, suggesting a less compelling risk-reward profile for investors in the near term.