Silver Price Forecast: XAG Sixth Straight Deficit: Breakdown Below $74 – $71.20 Next?

Quick overview

As of May 4 2026 – when the morning trading kicked off , spot silver ( XAG/USD) has taken a tumble and is now trading around $73.50 – $74.00 per ounce. Which is pretty weak considering it slipped below some key levels.

Key Drivers for Today

• The Deficit Keeps Getting Worse. The silver market is looking at a sixth year running of annual shortfalls by the end of 2026, and its not looking good with a projected 46.3 million ounce shortage – a 15% jump from last years 40.3 million deficit ( courtesy of the Silver Institute ). The run of drawdowns from above ground stocks since 2021 is now up to a staggering 762 million ounces and its clear that visible inventories are running on empty.
• Supply is in Trouble. Not a lot of good news coming from the mines : global production is expected to only just edge up by 0.3% this year – 844.1 million ounces. Although Mexico is expected to do a bit better most other places are seeing declines – and when you normalize producer hedging , total supply is looking to be down a decent couple of %. It aint looking good.
• Demand Story is Mixed. As we have seen , most of our silver goes to industry – about 55% of the total demand – and that is looking to moderate by 2-3% this time round to roughly 640-650 million ounces – a four year low. The photovoltaic crowd may be feeling a bit thrifty , but demand from electronics, data centres , evs and whatnot is still expected to stay pretty strong. The retail side – investing in bars and coins – is however expected to do a bit of a job of supporting silver prices
• The Macro Situation. The long term fundamentals are being driven by those persistent supply deficits and low inventories – even as the near term macro and geopolitical headlines keep on driving volatility.

It’s worth noting however that silver still does have that unique monetary-industrial role – which makes it super sensitive to any uptick in physical or investment buying.

Technical Analysis

Now silver is showing classic signs of weakness on its 4h chart – its broken below a very key $74.80-$76.30 resistance cluster after yet more failed attempts to hold on to those higher highs within the rising channel .

Its slipped below its 50 period EMA which is bearish in the short term and is also under pressure now from the ascending trendline. The RSI is starting to turn lower – and we are starting to see some fading buying momentum , although we arent seeing the kind of over sold conditions that you might expect.

Key Levels to Watch

• Resistance: $74.80 to $76.30
• Support: $71.20 to $69.00

Trade Idea: Sell when it drops below $74 and aim for $71.20 – Stop loss would be above $76.30

ABOUT THE AUTHOR See More

Arslan Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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