Silver Price Recovery Hinges on US NFP Data and Interest Rate Hikes

The US Nonfarm Payrolls (NFP) data is expected to rebound in August after posting a decline of 23k in July, according to TD Securities. The firm projects that the unemployment rate will remain steady at 4.1%, with balanced risks. A modestly hawkish employment report could reaffirm the Federal Reserve's attention on inflation, but it is unlikely to push the Committee towards interest rate hikes.

The US NFP report is expected to influence market expectations for the Fed's monetary policy outlook. The CME FedWatch tool shows that traders see a two-in-three chance of an interest rate hike in the September policy meeting. Higher oil prices due to restricted energy shipments through the Strait of Hormuz could fizzle out the recovery move in Silver prices.

The XAG/USD pair trades at $66.00, holding above the 20-day Exponential Moving Average (EMA) at $65.51. The Relative Strength Index (14) sits in neutral territory but leans higher, suggesting that buyers still have the upper hand without the market being overstretched.