Silver: XAG/USD holds losses below $62.50 on Fed hike bets

LONDON (July 6) Silver price (XAG/USD) halts its four-day winning streak, trading around $62.30 per troy ounce during the European hours on Monday. The white metal edges lower as market expectations solidify around a Federal Reserve (Fed) interest rate hike later this year.

According to the CME FedWatch tool, financial markets are currently pricing in around 77% probability of a rate increase by year-end. Investors will likely closely monitor US ISM Services PMI due later in the day for immediate direction, though primary focus has shifted to Wednesday’s release of the Fed's June policy Meeting Minutes for clearer guidance on the future path of interest rates.

This minor decline follows a stellar previous week, where Silver surged over 5.55%. That rally was sparked by weak US labor data, which forced markets to temper expectations for a September hike. June's Nonfarm Payrolls (NFP) grew by just 57,000, well below the 110,000 forecast. While the headline unemployment rate unexpectedly ticked down to 4.2% from May's 4.3%, the aggressive slowdown in hiring underscores a broader economic cooling.

Meanwhile, easing oil prices have helped dampen the inflationary pressures that previously heightened fears of aggressive rate hikes. Energy markets moved lower due to recovering flows through the Strait of Hormuz and the prospect of increased OPEC+ supply. This cooling energy sector has mitigated a key macro headwind, providing some structural relief to non-yielding precious metals like Silver.

FXStreet