Silver Holds Gain After Weak US Jobs Report

Silver traded near $64 an ounce on Monday after surging more than 10% last week, supported by an unexpected contraction in the US labor market that led traders to reduce expectations for a near-term Federal Reserve interest rate hike. Data released Friday showed the US economy unexpectedly lost 23K jobs in July, following a downwardly revised 20K increase in June and falling well short of forecasts for an 80K gain. Markets now price around a 44% chance of a 25 basis point rate hike in September, down from 67% a week earlier. Silver also held its gains even after oil prices climbed higher as uncertainty persisted over efforts to reopen the Strait of Hormuz. Iran said talks with Oman were close to an agreement but denied holding direct negotiations with the US, despite Washington’s claims that a deal was imminent.

Silver price rose to over $63.5 per ounce on Friday, the highest in seven weeks, as markets reconsidered the likelihood that the Federal Reserve will hike rates this year. New jobs data showed an unexpected drop in payrolls, limiting the leeway for higher rates to attend inflationary pressures. Still, fuel and natural gas prices held most of their pullback in August as the US presidential administration chased an agreement with Iran to restore energy exports through the Persian Gulf. Lower risks of a rate lowered yields and benefited precious metals. In turn, industrial demand for silver also supported bids, as Chinese imports of silver-bearing ores surged 62.5% annually in June to 219,000 tonnes. The data was in line with an expanding production for solar panels and electricity grids. Still, lingering risks of a flare-up in energy prices maintained silver relatively close to the seven-month low of $55 per ounce from July 16th.

Silver climbed above $63 an ounce on Friday, reaching a six-week high as investors awaited the closely watched US jobs report for fresh clues on labor market conditions and the outlook for Federal Reserve monetary policy. Markets remain divided over whether the US central bank will raise interest rates in September, although Fed officials have increasingly signaled a willingness to tighten policy soon amid mounting inflationary pressures. Investors also monitored developments in the Middle East, as renewed tensions in the Strait of Hormuz pushed oil prices higher, reviving concerns about inflation and the prospect of near-term rate hikes. Elsewhere, industrial demand continued to underpin silver prices, with Chinese imports of silver-bearing ores surging 62.5% year-over-year in June to 219,000 tonnes.