Silver prices (XAG/USD) have dipped below the critical psychological support level of $30.00 during Tuesday’s European session. The decline in silver is attributed to the rebound of the US Dollar (DXY), which has risen amidst uncertainty ahead of the US Nonfarm Payrolls (NFP) data for May. This data is anticipated to offer insights into whether the Federal Reserve (Fed) will lower key borrowing rates in its September meeting.
The US Dollar Index (DXY) has bounced back after nearing a multi-week low at around 104.00. A stronger dollar typically diminishes the appeal of dollar-denominated commodities like silver, making them more expensive for holders of other currencies.
Speculation regarding a potential Fed interest rate cut in September has been bolstered by recent US economic indicators suggesting a slowdown in economic growth. The US ISM manufacturing PMI indicated a contraction in factory activity for the second consecutive month, with a bleak demand outlook and slower expansion in input prices. Additionally, the US Q1 Gross Domestic Product (GDP) was revised downward to 1.3% from the initial estimate of 1.6%.
Investors are also focused on the JOLTS Job Openings data for April, scheduled for release at 14:00 GMT. It is estimated that US employers posted 8.34 million job openings, down from the previous reading of 8.49 million, signaling potential softening in the labor market.
Overall, the interplay of a rebounding dollar, mixed economic data, and rate cut expectations continues to shape the trajectory of silver prices, with market participants closely watching upcoming economic indicators for further direction.
