Silver prices continue to show strong momentum, trading around $40.85, up 0.45% on the day. The precious metal remains well-supported as expectations rise that the US Federal Reserve (Fed) will cut interest rates later this month. Silver’s upward movement is further bolstered by the weakening US Dollar (USD), while traders brace for the release of the highly anticipated US August Nonfarm Payrolls (NFP) report, which could provide fresh market direction.
US Economic Data Fuels Fed Rate Cut Bets
Recent US economic data, including the higher-than-expected increase in Initial Jobless Claims and a softer-than-expected ADP National Employment Report, signals softening labor market conditions. These reports have reinforced expectations of a Fed rate cut in the near term, which in turn weighs on the US Dollar and supports the price of Silver.
A reduction in interest rates typically lowers the opportunity cost of holding non-yielding assets like Silver, making it more attractive to investors seeking safe havens. As the market anticipates a more dovish stance from the Fed, Silver has found increased demand, driving its price higher.
Geopolitical Tensions Support Silver’s Safe-Haven Demand
Beyond economic data, geopolitical tensions, particularly surrounding the ongoing war in Ukraine, continue to add an element of uncertainty. The US’s ongoing efforts to pressure Russia through sanctions and the potential for further escalations in the region bolster Silver’s appeal as a safe-haven asset. Investors tend to flock to precious metals like Silver in times of geopolitical instability, further supporting its price.
NFP Data to Shape the Fed’s Next Move
The market is now focused on the US NFP report, set to be released later on Friday. The consensus forecast is for 75,000 job additions in August. A stronger-than-expected jobs report could boost the US Dollar, potentially pressuring Silver prices in the short term. Conversely, a weaker-than-expected result would likely reinforce the case for a rate cut, pushing Silver prices higher.
Silver Price Outlook: Bulls Eye $41.00
As the market digests these developments, Silver continues to trade near key technical levels, with immediate resistance seen around the $41.00 mark. A sustained break above this level would open the door for further upside, targeting $42.00 and beyond. However, a pullback is also possible if the NFP data surprises to the upside, putting pressure on the USD-denominated precious metal.
In summary, Silver’s bullish momentum remains intact, supported by expectations of Fed rate cuts and geopolitical uncertainties. As traders await the NFP report, Silver’s path could continue to be shaped by broader economic developments and central bank policies.
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