Silver holds near $50 despite weaker demand, Metals Focus says

Spot silver last traded at $48.58 an ounce, down 6% on the week, after struggling to hold support at $50. Prices reached a record $121.65 on January 26 before falling as bond yields rose, the U.S. dollar strengthened and expectations for Federal Reserve rates shifted. Silver is now down more than 35% from its peak.

Metals Focus forecasts a sixth consecutive annual global supply deficit in 2026, but puts the shortfall at 35 million ounces, compared with 54 million last year. Newman said supply and demand could move close to balance, or even produce a small surplus. He nevertheless described the market’s ability to hold elevated prices with little institutional exposure as encouraging, saying a return by those investors could leave room for gains.

Investment demand has weakened. Holdings in silver-backed exchange-traded products stood at 1.25 billion ounces on November 3, down 55 million ounces, or 4%, since the start of the year. Metals Focus expects net outflows of 45 million ounces in 2026. Bar and coin demand is forecast to fall 2% this year to 215 million ounces, while U.S. retail investment is expected to reach its lowest level since 2010.

Industrial demand is also easing, though it remains well above pre-pandemic levels. Metals Focus expects it to decline 3% this year to 640 million ounces, around 22% above 2019. Solar demand is projected to fall about 20% as high prices encourage manufacturers to use less silver or switch to cheaper materials. Outside photovoltaics, demand is forecast to rise 4.5% to 492 million ounces in 2026, supported by vehicle electrification, charging infrastructure and other applications. Newman also cited AI and data-center construction as a possible source of longer-term growth, while cautioning that demand may be smaller than expected.

Newman said renewed investor interest will depend in part on Federal Reserve policy, inflation and Middle East tensions. Energy-driven inflation has raised expectations of a December rate increase, a headwind for non-yielding assets. A de-escalation involving Iran, alongside softer U.S. inflation data, could improve sentiment, he said, though uncertainty may continue into early 2027. Metals Focus expects jewelry demand to fall 22% this year and silverware consumption 17%; Newman said buyers, particularly in India, are still spending on silver but choosing smaller, lighter items.