The China Banking Association issues a major warning! Silver volatility is slowing, but structural shortages support a bullish outlook.
2026-02-11 10:54:46
On Wednesday (February 11) during Asian trading hours, spot silver fluctuated upwards, currently trading around $82.20 per ounce, with a daily increase of approximately 1.85%. Silver prices have recently seen some easing of volatility, currently trading at a high level above $80 per ounce. Although still below the record high reached last month, according to the latest report from the Silver Institute, the long-term upward trend in silver remains firmly supported by strong fundamentals.
In its latest research report, the China Banking Association pointed out that the most fundamental positive factor for silver lies in the continued supply-demand imbalance . This structural shortage is expected to continue throughout 2026, marking the sixth consecutive year that the market has experienced an annual deficit due to supply falling short of demand.
The report analyzes that "the core drivers supporting the strong silver price in 2025 remain solid in early 2026, including tight physical supply in the London market, geopolitical instability, US policy uncertainty, and concerns about the independence of the Federal Reserve." Silver prices have risen by about 11% this year, and investment demand for gold and silver coins and bars has rebounded significantly recently, with global silver ETF holdings estimated at 1.31 billion ounces.
Looking ahead to 2026, investment demand is expected to be the main driver of further increases in silver prices, while a slowdown in global economic activity will drag down industrial silver consumption. Meanwhile, high price levels are expected to dampen jewelry consumption.
The report projects that physical investment demand will grow by 20% year-on-year in 2026, reaching 227 million ounces, a three-year high. After three consecutive years of decline, physical investment in Western markets is expected to recover in 2026, with silver's strong price performance and continued macroeconomic uncertainty reigniting investor interest. Investment demand in the Indian market is also expected to continue strengthening on top of a significant increase in 2025, benefiting from positive investor sentiment.
Meanwhile, industrial demand is expected to decline by 2%, falling to a four-year low of approximately 650 million ounces. The photovoltaic solar energy sector will be most affected, with many companies continuing to reduce their silver usage or seeking alternative materials.
However, despite the decline in silver consumption for photovoltaic applications, the global trend of economic electrification will continue to support industrial demand for silver. The report states, "Several silver application areas, such as data center expansion, artificial intelligence-related technologies, and the automotive industry, continue to benefit from long-term structural growth trends. Demand growth in these areas will, to some extent, offset the decline in photovoltaic-related demand."
As another important pillar of the silver market, jewelry demand is expected to decline by more than 9% year-on-year in 2026, falling to 178 million ounces, the lowest level since 2020.
The report states, "Similar to 2025, record high prices are expected to dampen jewelry consumption in major markets, with India being the most affected. China will be the main exception, with demand expected to recover slightly, driven by product innovation and the increasing popularity of gold-plated silver jewelry."
Despite weak demand in some specific sectors, overall demand is still expected to exceed supply. The report forecasts that global silver supply will grow by 1.5% to 1.05 billion ounces in 2026, a ten-year high.
Taking into account both supply and demand, the silver market is expected to continue to experience a significant shortage in 2026, with a deficit of 67 million ounces, marking the sixth consecutive year of market deficit .
Short-term technical indicators suggest that silver may be in a period of consolidation. The daily chart shows that the price of silver is still holding above the key indicator of the 50-day moving average (MA, 78.99). However, the MACD signal line has turned downwards, and the histogram is significantly in the negative range, indicating a clear bearish signal. In addition, the RSI is below the midline level, indicating that there may still be room for further downward momentum.
If the price can hold the 50-day moving average support, it is expected to enter a period of fluctuating upward trend; if it breaks down, it may open up downside potential to around $70.
In the medium to long term, attention should be paid to whether the fundamentals can provide bottom support or even upward momentum for prices.
(Spot silver daily chart, source: EasyForex)
At 10:54 Beijing time, spot silver is currently trading at $82.26 per ounce.
In its latest research report, the China Banking Association pointed out that the most fundamental positive factor for silver lies in the continued supply-demand imbalance . This structural shortage is expected to continue throughout 2026, marking the sixth consecutive year that the market has experienced an annual deficit due to supply falling short of demand.
The report analyzes that "the core drivers supporting the strong silver price in 2025 remain solid in early 2026, including tight physical supply in the London market, geopolitical instability, US policy uncertainty, and concerns about the independence of the Federal Reserve." Silver prices have risen by about 11% this year, and investment demand for gold and silver coins and bars has rebounded significantly recently, with global silver ETF holdings estimated at 1.31 billion ounces.
Investment demand is expected to be the main driver of prices in 2026, while industrial consumption will be under pressure.
Looking ahead to 2026, investment demand is expected to be the main driver of further increases in silver prices, while a slowdown in global economic activity will drag down industrial silver consumption. Meanwhile, high price levels are expected to dampen jewelry consumption.
The report projects that physical investment demand will grow by 20% year-on-year in 2026, reaching 227 million ounces, a three-year high. After three consecutive years of decline, physical investment in Western markets is expected to recover in 2026, with silver's strong price performance and continued macroeconomic uncertainty reigniting investor interest. Investment demand in the Indian market is also expected to continue strengthening on top of a significant increase in 2025, benefiting from positive investor sentiment.
Meanwhile, industrial demand is expected to decline by 2%, falling to a four-year low of approximately 650 million ounces. The photovoltaic solar energy sector will be most affected, with many companies continuing to reduce their silver usage or seeking alternative materials.
However, despite the decline in silver consumption for photovoltaic applications, the global trend of economic electrification will continue to support industrial demand for silver. The report states, "Several silver application areas, such as data center expansion, artificial intelligence-related technologies, and the automotive industry, continue to benefit from long-term structural growth trends. Demand growth in these areas will, to some extent, offset the decline in photovoltaic-related demand."
Jewelry demand has fallen sharply, but overall demand still exceeds supply.
As another important pillar of the silver market, jewelry demand is expected to decline by more than 9% year-on-year in 2026, falling to 178 million ounces, the lowest level since 2020.
The report states, "Similar to 2025, record high prices are expected to dampen jewelry consumption in major markets, with India being the most affected. China will be the main exception, with demand expected to recover slightly, driven by product innovation and the increasing popularity of gold-plated silver jewelry."
Despite weak demand in some specific sectors, overall demand is still expected to exceed supply. The report forecasts that global silver supply will grow by 1.5% to 1.05 billion ounces in 2026, a ten-year high.
Taking into account both supply and demand, the silver market is expected to continue to experience a significant shortage in 2026, with a deficit of 67 million ounces, marking the sixth consecutive year of market deficit .
Technical Analysis
Short-term technical indicators suggest that silver may be in a period of consolidation. The daily chart shows that the price of silver is still holding above the key indicator of the 50-day moving average (MA, 78.99). However, the MACD signal line has turned downwards, and the histogram is significantly in the negative range, indicating a clear bearish signal. In addition, the RSI is below the midline level, indicating that there may still be room for further downward momentum.
If the price can hold the 50-day moving average support, it is expected to enter a period of fluctuating upward trend; if it breaks down, it may open up downside potential to around $70.
In the medium to long term, attention should be paid to whether the fundamentals can provide bottom support or even upward momentum for prices.
(Spot silver daily chart, source: EasyForex)
At 10:54 Beijing time, spot silver is currently trading at $82.26 per ounce.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
