Silver prices continued their upward trajectory for the third consecutive session on Friday, trading around $31.50 during Asian hours. The appreciation of the grey metal is largely driven by increasing speculation that the US Federal Reserve (Fed) will implement an interest rate cut in September. This follows the European Central Bank’s (ECB) recent decision to reduce rates by 25 basis points on Thursday.
The demand for non-yielding assets like silver is on the rise as lower US labor data has bolstered hopes for two interest rate cuts by the Federal Reserve this year. Market participants are closely watching for further employment data from the US, including Average Hourly Earnings and Nonfarm Payrolls, which will be released later in the North American session.
Initial Jobless Claims in the US rose by 8,000 to 229,000 for the week ending May 31, exceeding market expectations of 220,000. This marks the highest level since the eight-month peak of 232,000 recorded in early May. The upcoming release of US employment data, including Average Hourly Earnings and Nonfarm Payrolls, is highly anticipated by traders.
A Reuters poll conducted from May 31 to June 5 indicates that nearly two-thirds of economists now predict a rate cut in September. Furthermore, the CME FedWatch Tool shows the probability of a Fed rate cut in September by at least 25 basis points has increased to nearly 70.0%, up from 51.0% a week earlier.
These developments have created a favorable environment for silver, which is benefiting from the growing expectation of looser monetary policy and the subsequent impact on non-yielding assets.
