International precious metals markets continued their weak performance this week. As of Wednesday, gold futures closed lower for the third consecutive trading session, with silver futures experiencing a more significant decline. The settlement price for COMEX May silver futures was $74.599 per ounce, a sharp drop of 2.2%, marking the lowest closing level since May 5th. Since the outbreak of the Iran conflict, precious metals have faced overall downward pressure, primarily due to the substantial blockade of the Strait of Hormuz driving up oil prices, which in turn has heightened inflation concerns and strengthened market expectations for Federal Reserve rate hikes. Despite the short-term weakness in silver, Wall Street firms hold significantly divergent views on its future trajectory. Bank of America's commodities team presented an "up first, then down" outlook in its latest research report. The bank's analysis team, led by metals research head Michael Widmer, remains optimistic, suggesting that silver prices could reach $100 per ounce by the fourth quarter of 2026. However, Bank of America also issued a clear warning: this upward move may be "short-lived" and unsustainable. The bank forecasts that, due to a structural decline in industrial demand, silver prices will retreat to around $75 per ounce by the second quarter of 2027. Notably, Bank of America's projection is more optimistic than many peers but still allows for downside. UBS, in a previous report, had already significantly lowered its silver price target for the end of the second quarter of 2026 from $100 to $85, reduced its year-end target from $85 to $80, and set a forward target of $75 for March 2027. UBS strategists pointed out that a fundamental shift in the silver supply-demand balance is expected in 2026. This year's supply deficit is projected to shrink dramatically from an earlier estimate of 300 million ounces to just 60-70 million ounces, a "cliff-like" contraction that is the root cause of diminishing upward momentum for silver prices. A previous report from the World Silver Institute corroborated this trend, estimating a global silver market deficit of approximately 67 million ounces in 2026. While this would mark the sixth consecutive year of deficit, the scale has significantly narrowed. The wave of "de-silvering" is impacting demand, with photovoltaic sector demand peaking. In Bank of America's view, the greatest structural headwind for silver comes from the "de-silvering" trend in the industrial sector. "While a gold rally could push silver above $100/ounce again in the coming months, we do not believe silver will consistently outperform gold due to weakening fundamental demand," Bank of America analysts wrote in the report. The bank further noted that high prices are forcing manufacturers in key industrial sectors—particularly the solar photovoltaic industry—to actively reduce silver usage or switch to lower-cost alternative metals like copper. Photovoltaics, currently the largest industrial demand sector for silver, accounted for 35% of global industrial silver consumption in 2025. However, with the rapid penetration of N-type high-efficiency cells like TOPCon and HJT reaching 70%, silver consumption per watt has increased significantly. Silver paste costs now constitute over 50% of the non-silicon costs for some high-efficiency cell modules. High silver prices are significantly squeezing profit margins for photovoltaic manufacturers, compelling companies to accelerate their "de-silvering" processes. "We believe industrial sector demand for silver peaked last year, influenced by multiple factors, including a strong willingness among manufacturers to reduce silver usage in their processes. The slowdown in China's solar photovoltaic capacity growth and a potential decline in global solar installations this year further exacerbate this headwind," Bank of America analysts stated. As demand shifts, the price logic is changing. With industrial demand being eroded by high prices, the silver supply-demand balance could change rapidly. Bank of America analysts warn that due to declining industrial consumption, elevated silver prices could easily push the market back into a state of oversupply. Following the near-exponential surge in silver prices, market participants like photovoltaic module manufacturers face significant margin pressure, greatly incentivizing efforts toward "engineering de-silvering" in their processes. Reduced usage means this year's silver supply deficit could shrink by as much as 90%, to the point where even minor investor selling could be enough to flip the market directly into surplus. UBS highlighted similar reasoning in its report. Demand is facing triple pressure: photovoltaic silver demand is weakening due to high prices, silver jewelry and silverware consumption is also being suppressed by high prices, and investment demand has cooled significantly—global silver ETF holdings have seen outflows of nearly 70 million ounces. Amid this structural shift, Bank of America believes the way silver is priced is changing, potentially leaning more toward a precious metal logic rather than that of a pure industrial commodity. "Investor demand may be key to future price movements," the report emphasized. Multiple intertwined risks contribute to short-term volatility. Beyond the medium-to-long-term structural headwind of "de-silvering," the silver market also faces multiple short-term uncertainties. First, the Federal Reserve's policy path remains a core variable. Market expectations for a Fed rate hike this year continue to strengthen, with the current probability estimate for one hike in 2026 exceeding 50%. The new Fed Chair, introduced by Trump, has raised market concerns that his first official statements could be hawkish amid higher-than-expected inflation, potentially pressuring non-yielding assets like precious metals. Traders are closely watching the upcoming release of the U.S. April Personal Consumption Expenditures (PCE) index data on Thursday for further clues on the interest rate path. Second, geopolitical tensions are affecting market sentiment. The U.S. military conducted "defensive strikes" in southern Iran on Monday, targeting missile launch sites and Iranian vessels attempting to lay mines. Iran announced it had shot down a U.S. drone and fired to repel fighter jets. Analysts view the exchange of fire during a ceasefire period as a form of "maximum pressure" negotiation tactic. Iran's state television recently stated that the country will restore shipping in the Strait of Hormuz to pre-war levels within a month under a framework agreement with the U.S., which also includes the withdrawal of U.S. troops from around Iran. If the agreement is implemented and the strait reopens, a decline in oil prices could help ease inflation pressure, providing some breathing room for silver. Conversely, an escalation in geopolitical risks would exacerbate the already complex macroeconomic landscape. Additionally, the North American Free Trade Agreement negotiations are seen as a potential "black swan." Canada and Mexico are the largest suppliers of silver to the U.S., and trade policy uncertainty has prompted market participants to maintain exceptionally high inventories within the U.S., tightening globally available supply. Insufficient liquidity could further amplify price volatility. Silver is currently caught in a tug-of-war among multiple forces. In the short term, developments in the Iran situation and signals from Federal Reserve policy will continue to dominate silver price movements, with whether gold can provide effective support being another key variable. In the medium to long term, the substitution effect on industrial demand triggered by high silver prices may fundamentally reshape silver's pricing logic. As Bank of America noted, photovoltaics will remain a core demand pillar for silver, but the direction of "de-silvering" is now difficult to reverse—this may mean that even if silver prices return to the $100 level in the future, their foundation is quietly eroding.