In Thursday’s Asian session, the price of silver (XAG/USD) continues its recovery, reaching $30.60, driven by robust buying interest. The resurgence in the white metal’s value stems from growing anticipation that the Federal Reserve (Fed) may initiate interest rate reductions at its September meeting, buoyed by signs of normalization in the United States (US) labor market.
According to the CME FedWatch tool, traders assign a 68% probability to rate cuts in September, marking a notable increase from the 47% probability recorded just a week ago. This shift in sentiment has exerted downward pressure on US bond yields, with 10-year US Treasury yields marginally rising to approximately 4.29%, yet significantly lower than the weekly high of 4.64%. The decline in yields diminishes the opportunity cost of holding investments in non-yielding assets, such as silver.
Confidence in the strength of the US labor market wanes following disappointing data releases, including weak JOLTS Job Openings figures for April and lower-than-expected ADP Employment Change data for May.
Amidst these developments, the US Dollar Index (DXY) experiences a sharp decline after failing to sustain a recovery above 104.40, although it maintains immediate support at 104.00. The upcoming release of the US Nonfarm Payrolls (NFP) report for May, scheduled for Friday, is poised to shape the next trajectory of the aforementioned assets, with market participants closely monitoring its insights into the state of the US labor market.
