Silver falls to £49 as Warsh's hawkish Jackson Hole speech dashes rate-cut hopes

Silver tumbled £3 per ounce on Friday after Federal Reserve Chair Kevin Warsh's Jackson Hole speech disappointed investors betting on imminent interest rate cuts. The white metal fell from a two-month high near $71 (approximately £52) to around $66.22 (roughly £49) by session's end, a drop of almost 6 per cent in a single trading day.

Warsh's remarks were unexpectedly hawkish. Whilst he acknowledged recent improvements in US economic data, he cautioned that underlying inflation remains elevated and suggested the Federal Reserve may need to maintain restrictive interest rates longer than markets had hoped. Traders rapidly repriced September rate-hike odds from 35 per cent to nearly 58 per cent inside a single afternoon session. When central banks keep rates higher for longer, the opportunity cost of holding non-yielding assets like silver increases, because investors can earn superior returns from cash and bonds instead.

The selloff also reflects a stronger US dollar, which typically accompanies rising rate expectations. For pound-based UK buyers, a firmer greenback makes dollar-priced metals more expensive to import and purchase. Sterling weakness amplifies the sting: silver purchased at £49 per ounce now carries a broader all-in cost including the standard 20 per cent VAT, dealer premium, and delivery fees that collectively push the true price substantially higher.

Despite Friday's reversal, analysts remain constructive longer term. UBS projects silver reaching £60 by December 2026 and £80 by mid-2027, suggesting the Warsh-driven selloff may represent a buying opportunity for patient investors. This is not financial advice.