Silver prices (XAG/USD) are trading in positive territory, nearing $51.00 during Monday’s Asian trading hours. The white metal is gaining ground amidst lingering uncertainty following the conclusion of the US government shutdown. Investors are also anticipating speeches from several Federal Reserve officials, including John Williams, Philip Jefferson, Neel Kashkari, and Christopher Waller, later today.
Markets are preparing for a wave of delayed economic reports, which are expected to indicate a slowdown in the US economy. The US Nonfarm Payrolls (NFP) report, due on Thursday, will be a key focus, potentially clarifying the Fed’s interest rate outlook for December. Any signs of weakness in the US labor market could depress the US Dollar (USD) and, in turn, support the price of the USD-denominated commodity.
Carol Kong, a currency strategist at Commonwealth Bank of Australia (CBA), commented, “I think the risk is definitely skewed to a weaker payrolls print, and that would just reignite market expectations about a December FOMC rate cut and send the U.S. dollar down.”
Conversely, recent hawkish comments from Fed policymakers, made ahead of the upcoming deluge of US economic data, have unsettled traders and could exert downward pressure on silver. For example, Kansas City Fed President Jeffery Schmid stated on Friday that monetary policy should lean against demand growth and deemed the current Fed policy “modestly restrictive” and appropriate.
According to the CME FedWatch tool, markets are now pricing in approximately a 40% chance of a 25 basis point (bps) rate cut at the Fed’s December meeting, a significant drop from over 60% earlier this month.
