Silver Jumps Near $61.80 as Fed Rate Hike Bets Fade

Silver prices surged to nearly $61.80 on Monday as traders scaled back expectations of aggressive interest rate hikes by the Federal Reserve. The shift in sentiment followed softer-than-expected US labor market data for September, which showed only 29,000 new jobs created, far below the estimated 90,000 and the previous revised figure of 133,000. The unemployment rate also rose to 4.2%, up from the expected 4.1%. These figures led to a significant drop in the odds of a Fed rate hike this month, falling to 19.4% from 70.9% a week earlier.

The reduced hawkish stance from the Fed improved the appeal of non-yielding assets like silver, driving its price up by 2.3%. However, the US Dollar remained firm due to heightened French debt concerns, which boosted its safe-haven demand. The US Dollar Index (DXY) traded 0.3% higher near 102.20, reaching a fresh annual high of 102.53 earlier in the day. A stronger dollar typically makes silver a less attractive investment.

Despite the market reaction, analysts at Deutsche Bank maintained a more cautious outlook, noting that the overall labor market remains stable. They still expect two more 25 basis point rate hikes by the Fed over the next couple of quarters. Deutsche Bank highlighted that while the September payrolls data was disappointing, other labor market indicators, such as ADP and jobless claims, remain resilient.

From a technical perspective, silver (XAG/USD) is trading at $61.69, maintaining a bearish near-term bias as it remains below the 20-day exponential moving average at $63.24. The Relative Strength Index (RSI) at 43.89 suggests subdued bullish momentum. Key resistance levels include the 20-day EMA and the September 9 high at $68.33, while immediate support is found at $60.00, with further downside risk to the August 3 low at $56.57 if support fails.