Silver Dives Below $66.00 as Fed Rate Hike Chances Rise
The US Labor Department's Nonfarm Payrolls (NFP) report for August showed an unexpected surge in employment, surpassing market analysts' forecasts. The data revealed a net gain of 162K jobs, significantly higher than the anticipated 57K, easing concerns about a softening labor market.
This strong economic indicator prompted investors to reassess their expectations for a Federal Reserve (Fed) rate hike at the upcoming September 15-16 monetary policy meeting. According to data from the CME FedWatch Tool, the probability of a rate increase rose to 58%, up from around 50% before the release.
Analysts at ING believe that the next key event will be this Friday's August Consumer Price Index (CPI) report, which they expect to show month-on-month readings of 0.4% for headline inflation and 0.2% for core inflation. They predict that these numbers will be enough to sway the Fed towards a 25 basis point rate hike on September 16.
The silver market has been under pressure, with the XAG/USD pair trading below $66.00. Technical analysts point out that this level could mark the start of a bearish Head & Shoulders pattern, which would suggest further price declines. The Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) indicators are currently in negative territory, indicating growing bearish pressure.