Silver climbed to a weekly high near $62.15 on Friday as a weak US jobs report cut expectations for Federal Reserve rate hikes. Traders now price a 52% chance of a September hike, down from 66% before the data, though the metal's daily chart still reads bearish.
Silver jumped to a weekly high near $62.15 during early European trading on Friday, extending a rally driven by cooling US labor data. A weaker-than-expected Nonfarm Payrolls report reduced expectations of Federal Reserve interest rate hikes this year, lifting the non-yielding metal.
Weak jobs data reshapes rate bets
The June Nonfarm Payrolls report, released Thursday, showed the US economy added 57,000 jobs, well below the 110,000 consensus. The unemployment rate edged down to 4.2% from 4.3% in May, but the slowdown in hiring pointed to a broader loss of economic momentum.
Traders responded by paring back bets on tighter policy. According to the CME FedWatch tool, the chance of a rate hike by September fell to nearly 52%, down from 66% before the jobs data. Lower expected policy rates reduce the opportunity cost of holding precious metals and can underpin investor demand.
Fed and energy markets add support
Federal Reserve Chair Kevin Warsh, speaking at the ECB's Sintra conference, reiterated the central bank's focus on its 2% price stability goal and noted that both inflation risks and inflation expectations have eased over the past month. That shift in perceived inflation pressure typically benefits silver.
Energy markets reinforced the move. Crude oil prices have declined as commercial shipping activity recovered through the Strait of Hormuz, reflecting progress in US-Iran discussions in Doha. However, renewed tensions between Washington and Tehran could revive inflation worries and weigh on the white metal.
Chart still reads bearish
Despite the bounce, the daily chart holds a bearish near-term stance. Price sits below the Bollinger middle band and well under the 100-day moving average, while the Relative Strength Index near 42 points to subdued momentum and suggests recent bounces remain corrective.
Initial resistance sits at the Bollinger middle band near $63.50, with the $70.00 level beyond it. On the downside, the first target is the $60.00 round mark, with the lower Bollinger band near $55.25 below that.
Sources: FXStreet, TradingPedia
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