Silver extended its run of elevated volatility on Wednesday amid forecasts of stronger investment buying and weak industrial demand in the year ahead.Spot prices rose as much as 6.6% to over $86 an ounce, near its highest in a week, before erasing some of the gains. The white-colored metal has now recovered a third of its losses suffered during the historic crash in late January.Rising investment to keep global silver demand steady in 2026, Silver Institute saysEarlier, a report published by the Silver Institute predicts that the market will enter a sixth straight year of deficit, as surging investment in the metal are likely to outweigh a weakening industrial demand.According to the Institute, demand from sectors led by solar is expected to decline “moderately” in 2026, as manufacturers are now seeking alternatives to silver due to high prices.Over the past year, silver has rallied to multiple records amid surging safe-haven demand and interest from retail investors. At its peak, the metal’s value increased by nearly four times within a year to over $121 an ounce.Despite a historic selloff last month, where prices cratered by as much as 36%, silver remains up by more than 160% for the past year.‘Untradeable’ metalGiven the metal’s volatility, some traders have dubbed the metal “untradeable”– as physical, sellable inventory of the metal is severely limited or unavailable. This is the case in China, where producers and traders are struggling to fill a backlog of orders due to the high speculative demand in recent months, leading to a sharp rise in front-month contract premiums.“This exceptionally high volatility [in precious metals] is likely to have affected investor confidence,” analysts from Germany’s Commerzbank said recently. However, Aakash Doshi, global head of gold strategy at State Street, reckons that “now the markets have stabilized, you’re seeing dip buying.”While a wave of investors is expected to lead to a shift in existing silver inventories, it’s wrong to see the market as being in “deficit,” BMO Capital Markets said in a note Wednesday. “A better metric is how the supply of silver compares to the actual consumption of the metal for ornamental or industrial purchases, demand that removes bullion from the market.”As a result, BMO analysts see silver becoming cheaper relative to gold in the coming years, as physical availability of the metal improves.Gold, meanwhile, rose by about 1% to above $5,100 an ounce before paring some gains.(With files from Bloomberg)
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