Silver prices (XAG/USD) rebounded on Friday, trading around $30.60 per troy ounce during the European session. Recent weaker economic data from the United States has fueled speculation that the Federal Reserve might consider cutting interest rates in 2024, boosting support for non-yielding assets like silver.
Federal Reserve Chair Jerome Powell’s recent remarks added to the dovish sentiment. On Tuesday, Powell indicated that the Fed is back on a disinflationary path but stressed the need for more evidence before any rate cuts, given the ongoing strength of the US economy and labor market, as reported by Reuters.
The US ISM Services PMI dropped sharply to 48.8 in June, the steepest decline since April 2020. Additionally, the ADP Employment report showed that US private businesses added only 150,000 jobs in June, marking the smallest increase in five months.
Investors are now focused on the upcoming US employment report, which is expected to show a slowdown in job growth for June. Forecasts predict the US Nonfarm Payrolls (NFP) will increase by 190,000 jobs, down from 272,000 in the previous month. Additionally, US Average Hourly Earnings are anticipated to moderate slightly, with projections showing a decrease to 3.9% year-over-year from the prior 4.1%.
Geopolitical developments may also influence silver prices. Israeli Prime Minister Benjamin Netanyahu informed US President Joe Biden on Thursday that he plans to send a delegation to resume stalled negotiations on a hostage release deal with Hamas. An Israeli negotiator indicated there is a real chance of reaching an agreement following Hamas’ revised proposal, according to Reuters. This could limit the upside for safe-haven assets like silver.
Silver’s demand is further bolstered by its critical role in renewable energy. As a key component in solar panels and other technologies, silver benefits from the growing expansion of renewable energy projects due to its superior conductivity in photovoltaic cells.
