Mapping Silver Course
Despite the current weakness, silver remains within range of the 12-year high of $32.72 reached last week. A sustained move above this level could pave the way for a test of USD 34.35. On the downside, minor support lies at $31.21, with a potential decline to $30.21 if this level is breached.
Jobs data is reshaping expectations for rate cuts
Wednesday’s U.S. private payrolls report showed a stronger-than-expected increase in September, signaling resilience in the labor market. This data has influenced expectations for rate cuts, with the CME FedWatch Tool now indicating a 34% probability of a 50 basis point cut in November, up from 49% last week.
The Fed’s inflation battle may continue
Thomas Barkin, president of the Richmond Federal Reserve, warned that the battle against inflation could take longer than expected, potentially limiting the room for rate cuts. This view, combined with robust economic data, has dampened expectations for aggressive monetary easing.
Tensions in the Middle East provide limited support
Recent escalations in the Middle East, including the Iranian missile attack on Israel and Israel’s subsequent bombing of Beirut, have provided some safe haven support for silver. However, the impact has been limited due to shifting interest rate cut expectations.
All eyes on Friday’s jobs report
The focus now shifts to Friday’s US nonfarm payrolls report. A weak data print or a rise in unemployment could push silver to the top of its range, possibly as high as $35. The size of any move will depend on the weakness of the data and its impact on interest rate cut expectations.
The current market environment offers a mixed outlook for silver. While geopolitical tensions and potential economic weakness provide some support, the prospect of delayed rate cuts is weighing on prices. Traders should keep a close eye on Friday’s jobs report for near-term direction.