Silver Climbs Near $61 as Fed Rate Hike Odds Dip

Silver prices (XAG/USD) rose on Friday, approaching $61.00 per troy ounce during Asian trading. This uptick follows a day of losses and comes as weaker-than-expected US employment data reduced expectations for further interest rate hikes by the Federal Reserve. Financial markets now assign a 77.9% probability that the Fed will hold interest rates steady at its October meeting, up from 74% before the latest labor report.

The shift in rate expectations was driven by disappointing US labor market performance. Nonfarm Payrolls added only 29,000 jobs in September, far below the projected 90,000 and significantly lower than August’s revised figure of 133,000. The unemployment rate edged up to 4.2%, while labor force participation slightly increased to 61.8%. These figures suggest a cooling job market, which could prompt policymakers to maintain current rates.

Safe-haven demand for silver also received support from escalating geopolitical tensions in the Middle East. Saudi-backed forces in Yemen launched a major offensive against Houthi forces, following the Iran-aligned group’s seizure of the Bab el-Mandeb strait, a critical maritime route for crude oil exports. This geopolitical uncertainty has added to silver’s appeal as a hedge against instability.

TD Securities noted that recent pressure on yields, driven by higher Fed pricing, growth expectations, and oil prices, is likely to ease. The firm’s rates strategists believe that US Treasuries may see a bull-steepening trend, with markets sharply pricing out further near-term Fed hikes, indicating a more favorable rates environment moving forward.