(Kitco News) - Although silver has been unable to sustain an initial breakout above $39 an ounce to start the week, the precious metal is maintaining an impressive rally near 14-year highs. According to one investment bank, this could mark the high-water mark through 2026.
Robust industrial demand has supported the silver market and has been the primary driver behind its significant supply deficit. However, the commodities team at Macquarie, led by Marcus Garvey, notes that investment interest is now in the driver’s seat.
“As we argued in March, against a healthy physical supply-demand backdrop, ‘the return of stronger financial buying, including through derivative positioning, retains the scope to drive periods of pronounced silver performance,’ and it is exactly this which we believe has lifted prices,” the analysts said in a note published late last month.
Spot silver last traded at $38.38 an ounce, roughly unchanged on the day.
The latest trade data reveals an interesting discrepancy in the silver market: speculative futures investors have been taking profits while ETF investors are increasing their positions.
Trade data from the Commodity Futures Trading Commission’s disaggregated Commitments of Traders report for the week ending July 8 showed that money managers increased their speculative gross short positions in Comex silver futures by 1,934 contracts. At the same time, long positions fell by 237 contracts.
Silver’s net length now stands at 42,756 contracts, down nearly 5% from the previous week.
Analysts also note that CFTC trade data shows swap dealers—who act as principals or agents to facilitate transactions in swap contracts—hold record short positions. Some analysts suggest these could be linked to rising ETF demand.
Last week, global silver-backed exchange-traded funds saw inflows of 322,000 ounces. Silver holdings in ETFs have climbed to 775 million ounces, the highest level since August 2022.
Although Macquarie remains bullish on silver, the bank sees a limit to the current rally.
In their mid-year commodity report, the analysts raised their silver price forecast for the year due to increasing investor demand. The Australian bank now expects silver prices to average $36 an ounce in the third quarter, up from its previous forecast of $33. For the final quarter of the year, prices are projected to average around $35 an ounce—an increase of 13% from the prior estimate.
“Our prior forecasts assumed this would struggle to occur in the shadow of a trade war, but the resilience of global growth and broader market performance has created a window of opportunity for silver to perform, and we mark to market our forecasts accordingly,” the analysts said.
While silver is expected to maintain gains above $30 an ounce through 2026, Macquarie anticipates prices will peak this summer.
Heading into 2026, the analysts forecast silver prices to average between $33 and $34 an ounce in the first quarter, and $29 to $30 an ounce in the second quarter—revised upward from previous estimates of $29 and $30, respectively.
“Into 2H25, we expect the dynamics to shift somewhat, as silver again benefits from strong gold price performance but is likely to lose its risk-asset tailwind as global industrial production growth slows and the pre-tariff demand pull-forward unwinds,” the analysts said. “Into 2026, with global growth re-accelerating, silver should, however, outperform gold. We expect the gold/silver ratio to decline toward 83. In outright terms, silver prices should also prove resilient, but the drag from gold means our base case sees them holding within recent ranges.”
