Silver (XAG/USD) rebounded to trade around $61.00 per troy ounce during Asian hours on Friday, recovering from previous losses as softer-than-expected US employment data diminished the likelihood of further Federal Reserve interest rate hikes. The US Nonfarm Payrolls report showed an increase of only 29,000 jobs in September, significantly below Wall Street's estimate of 90,000 and a sharp decline from August’s revised figure of 133,000. The US unemployment rate edged up to 4.2%, while the labor force participation rate rose slightly to 61.8% [1].
This weaker labor market data led financial markets to price in a 77.9% probability that the Fed will keep rates unchanged at its October meeting, up from 74% prior to the jobs report. The shift reflects growing sentiment that a cooling job market will prompt policymakers to hold rates steady [1]. According to TD Securities, the recent rise in yields was driven by "higher Fed pricing, growth expectations, and oil," but their strategists now believe "rates should breathe a sigh of relief" as the pressure from rate hike expectations fades. This is set against a backdrop of a post-payrolls bull-steepening in US Treasuries and markets sharply pricing out further near-term Fed hikes [1].
In addition to the macroeconomic backdrop, safe-haven demand for silver remains supported by escalating geopolitical tensions in the Middle East. Saudi-backed forces in Yemen launched a major offensive to reclaim territory from Houthi forces, and tensions intensified after the Iran-aligned group seized control of the Bab el-Mandeb strait, a critical maritime chokepoint for regional crude exports [1].
Overall, the combination of softer US labor data, shifting Fed rate expectations, and heightened geopolitical risks has contributed to silver's recent gains.
CONCLUSION
Silver prices surged near $61.00 per ounce as disappointing US jobs data reduced expectations for further Fed rate hikes and geopolitical tensions in the Middle East boosted safe-haven demand. Market participants now see a higher probability of steady US rates in October, with analysts suggesting easing pressure on yields. The outlook for silver remains supported by both macroeconomic and geopolitical factors.