Silver Climbs as Fed Rate Hike Bets Dim

Silver prices (XAG/USD) surged by 2.3% to near $61.80 during Monday’s European trading session. The rise comes as traders scaled back expectations of Federal Reserve interest rate hikes following weaker-than-expected U.S. labor market data for September. The economy added just 29,000 new jobs, significantly below the 90,000 estimate and a revised prior reading of 133,000. The unemployment rate also increased to 4.2%, higher than the expected 4.1%. According to the CME FedWatch tool, the odds of a Fed rate hike this month dropped to 19.4% from 70.9% a week ago.

Non-yielding assets like silver often benefit when interest rate hike expectations recede. However, Deutsche Bank analysts maintain a more cautious outlook, arguing that the broader labor market remains stable despite the disappointing headline figure. They anticipate two further 25 basis point Fed hikes over the next few quarters. Meanwhile, the U.S. Dollar (USD) strengthened, with the US Dollar Index (DXY) rising 0.3% to near 102.20, potentially limiting silver’s upside.

Technically, silver (XAG/USD) is trading at $61.69, with a bearish near-term bias as it remains below the 20-day exponential moving average (EMA) at $63.24. The Relative Strength Index (RSI) at 43.89 suggests subdued bullish momentum. Key resistance lies at the 20-day EMA, while immediate support is at $60.00, with further downside risk to $56.57 if support fails.