Silver holds near £49 per ounce as rate bets trump falling industrial demand

Silver traded near £48.80 per ounce on Sunday, consolidating gains that have pushed the white metal up 17 per cent over the past month. The rally reflects a fundamental shift in how investors view interest rate policy across the Atlantic, overshadowing a paradoxical weakness in silver's traditional industrial backbone.

The driver remains straightforward: Federal Reserve rate-cut expectations have risen sharply following soft US employment and inflation data in early August. With the Bank of England widely expected to cut by September, real yields on cash are falling, making non-yielding assets like silver more attractive to investors. A softer US dollar - now at its weakest level in weeks - amplifies the effect for pound-based buyers, who see spot prices fall when sterling strengthens against the greenback.

Yet silver faces a headwind that gold does not. Global photovoltaic demand for silver is expected to drop 19 per cent this year to roughly 151 million ounces, as panel manufacturers adopt new cell technologies requiring less of the metal. Industrial consumption accounts for roughly 58 per cent of global silver demand, so this shift matters. Semiconductors, data centres and electric vehicles provide modest offsets, but the solar slowdown is real.

Despite the demand weakness, analysts from BlackRock and J.P. Morgan expect silver to exceed £55 per ounce by year-end and potentially reach £70 by 2030. For UK buyers, remember that all-in cost at current levels includes a 20 per cent VAT charge, dealer premium, and any storage or delivery fees. This is not financial advice.