During the Asian trading session on Wednesday, spot silver prices trended upwards, currently trading near $82.20 per ounce with an intraday gain of approximately 1.85%. Recent volatility in silver prices has moderated, with the metal now trading consistently above $80 per ounce. Although still below the historic peak set last month, the long-term upward trend for silver remains firmly supported by strong fundamentals, according to the latest report from the Silver Institute.

The Silver Institute's recent research report highlights that the core fundamental driver for silver is a persistent supply-demand imbalance. This structural deficit is projected to continue throughout 2026, marking the sixth consecutive year of an annual market shortfall. The report analysis states: "The key drivers that supported stronger silver prices in 2025 remain firmly in place at the start of 2026. These include tight physical supplies in the London market, a volatile geopolitical environment, U.S. policy uncertainty, and concerns regarding Federal Reserve independence." Silver prices have accumulated an increase of roughly 11% year-to-date. Recent investment demand for silver coins and bars has shown significant recovery, with global silver ETF holdings estimated at 1.31 billion ounces.

Investment demand is forecast to be the primary driver of silver prices in 2026, while a slowdown in global economic activity is expected to weigh on industrial consumption. Furthermore, elevated price levels are anticipated to suppress jewelry demand. 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, reignited by silver's strong price performance and ongoing macroeconomic uncertainties. Investment demand in the Indian market is also forecast to strengthen further, building on substantial growth in 2025, benefiting from positive investor sentiment. Conversely, industrial demand is projected to decline by 2%, falling to a four-year low of approximately 650 million ounces. The photovoltaic solar sector is expected to be the most significantly affected, as numerous companies continue efforts to reduce silver loadings or seek alternative materials. Despite the downturn in PV silver consumption, the broader global trend towards electrification will continue to support industrial demand for silver. The report notes: "Several areas of silver application, including data center expansion, AI-related technologies, and automotive industry development, continue to benefit from long-term structural growth trends. Demand growth in these areas will partially offset the decline in PV-related demand."

As another crucial pillar of the silver market, jewelry demand is forecast to decline by over 9% year-on-year in 2026, dropping to 178 million ounces, which would be the lowest level since 2020. The report states: "Similar to 2025, record-high prices are expected to curb jewelry consumption in key markets, with India being the most affected. China is expected to be a major exception, with demand anticipated to see a modest recovery driven by product innovation and growing popularity of silver-plated jewelry." Despite weakness in some demand segments, total demand is still projected to exceed supply. The report forecasts that global silver total supply will increase by 1.5% in 2026, reaching 1.05 billion ounces, a ten-year high. Considering both supply and demand factors, the silver market is projected to record a significant deficit of 67 million ounces in 2026, representing the sixth consecutive annual market shortfall.

Short-term technical analysis for silver suggests potential consolidation. The daily chart shows the price remains above the key 50-day Moving Average support level at $78.99. However, the MACD signal line is turning downwards, with its histogram significantly in negative territory, indicating bearish signals. Furthermore, the RSI is below the midline, suggesting downward momentum may still have room to unfold. If the price holds above the 50-day MA support, it could enter a consolidation phase with a stronger bias. A break below this level, however, could open the door for a move down towards the $70 area. From a medium to long-term perspective, attention should focus on whether the fundamental picture can provide a price floor or even upward momentum.