Silver's Supply Puzzle: BofA's $75 Target Meets a Chinese Output Stumble and a Rate-Driven Selloff
Published on 11/03/2026 at 18:41 | Editorial boerse-global.de
Silver changed hands at $49.73 an ounce on Thursday, and the metal's near-term direction owes more to macro forces than to anything happening in a Chinese smelter. Fresh data showing a 5.03% month-on-month drop in China's silver bar production in October landed alongside a steeper 13.48% decline in silver nitrate output for photovoltaics — a mixed signal that offers little comfort to bulls or bears alike.
A One-Month Dip, Not a Structural Shift
The October shortfall in Chinese silver bars came courtesy of holiday stoppages at recycling operations and maintenance work at copper smelters, according to media reports. Cumulative output for 2026 has reached roughly 16,000 tonnes, running 3.72% ahead of the prior-year figure. That year-to-date surplus undercuts any reading of October's pullback as the start of a lasting supply squeeze — the causes point to operational interruptions rather than a sustained contraction in Chinese output.
The distinction matters for pricing. Temporary outages carry a different weight than a persistent decline in production, and a single soft month is thin evidence for calling a structural turning point in supply.
Solar Weakness Cuts the Other Way
Where the bar data tightens the picture, the nitrate numbers loosen it. China's silver nitrate production for photovoltaic use fell 13.48% in October from September, a sign of softer processing activity in the solar chain. The Silver Institute, for its part, expects industrial silver demand to contract 3% in 2026 — yet still projects a market deficit of 46.3 million ounces.
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Those two forecasts are not contradictory. Weaker demand and a supply gap can coexist, though an anticipated deficit is no proof that a price recovery is imminent. What the Chinese figures deliver is a split verdict: fewer bars could cap available metal, while the nitrate decline hints at reduced industrial uptake. Investors weighing the numbers need to look past the volume of metal on hand and consider whether industry can absorb it.
The Long Game: Data Centers and a Deficit Ahead
Bank of America is looking well beyond this quarter. The bank reiterated its forecast of an average $75 per ounce in the second and third quarters of 2027, with the buildout of large AI data centers as a key pillar. BofA estimates silver demand for constructing and outfitting hyperscale facilities at 708,000 ounces per gigawatt of capacity, versus 318,000 ounces per gigawatt for conventional enterprise data centers. Those figures reflect one-time build and equipment needs — explicitly not recurring annual consumption — so the demand hinges on how much new capacity actually gets built.
The mix is shifting in a way that favors the bank's thesis. Hyperscale facilities now account for 37% of data-center capacity, up from about 10% in 2010, meaning the higher-intensity segment is gaining ground. Still, BofA does not rest its case on AI alone. It projects a global surplus of 910 tonnes in 2026, flipping to a deficit of 852 tonnes the following year — a swing driven by more than data-center demand. Project delays could push silver consumption into later periods, power constraints could throttle construction, and material efficiencies could cut the metal needed per facility. The forecast comes with strings attached.
Rates and Tech Selling Weigh on the Tape
For now, the market is focused elsewhere. Rising oil prices and a continued selloff in technology stocks pressured silver today, with doubts over diplomatic progress in the Iran conflict pushing inflation and interest-rate worries back to the fore. Wednesday's rebound had drawn on falling crude and easing inflation fears — a swing that shows how tightly short-term rate expectations now govern the metal's valuation.
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StoneX places silver in the $49 to $50 support zone, the range that marked its 2011 high, and sees no meaningful recovery yet. The firm still expects a countermove later and says a bullish reversal candle would improve the short-term chart. Its longer-term view stays constructive on growing industrial demand from solar, electric vehicles and AI data centers.
The next test arrives with the US jobs report on November 6, 2026. A strong print could reinforce expectations of higher rates and deal silver another blow. Against that, China's production outages alone are not a convincing counterweight to softer industrial demand and monetary-policy risk — leaving the metal caught between a bullish 2027 story and a market that, for the moment, is not buying it.
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