“The rise in US Treasury yields has created a challenging environment for silver, making it less attractive to investors,” said a commodities analyst at a leading investment firm. The US Dollar Index (DXY) also remained strong around 102.50, adding to pressure on the precious metal.
Expectations about Fed rate cuts are changing amid strong employment data
Market expectations for a significant 50 basis point rate cut by the Federal Reserve in November have fallen significantly following robust US employment data for September.
With 336,000 new jobs added last month, the report indicated strong labor demand and wage growth, prompting traders to reduce their bets on aggressive rate easing. Instead, market participants now see an 85% probability of a more modest rate cut of 25 basis points.
“Recent labor market data has led to a repricing of interest rate expectations, easing fears of a severe economic slowdown,” said a senior economist. As a result, silver prices face additional headwinds from a strengthening US dollar and diminished hopes for deeper rate cuts.
Domestic demand in India provides temporary support
Despite global bearish sentiment, silver prices have found some support in domestic markets, especially in India, where demand has increased ahead of the festival season.
Stockists and consumers have increased their purchases amid the ongoing Navratri celebrations, stabilizing prices in the region.