The white metal staged a dramatic turnaround this week, soaring from a seven-month low to above $61 per ounce as a trifecta of dovish Fed signalling, a disastrous payrolls report, and easing geopolitical tensions reshaped the interest-rate outlook. The rally caught many investors off guard, with futures swinging nearly $3 in a single session.
At the heart of the move was a sharp repricing of monetary policy expectations. Speaking at the ECB’s annual forum in Sintra, Federal Reserve Chair Kevin Warsh acknowledged that inflation expectations had softened, while reiterating the central bank’s commitment to its 2% target. Markets seized on the nuance: the Fed also abandoned its traditional forward guidance, a step that injected fresh uncertainty into rate bets. By midday Friday, CME Group’s FedWatch Tool showed the probability of a hike at the July 31 meeting had slumped to below 30%, down from more than two-thirds before the jobs data landed.
The catalyst arrived on Friday morning, when the US Bureau of Labor Statistics reported a shockingly weak June jobs print. Nonfarm payrolls rose by just 57,000, barely half the 110,000 that economists had penciled in. The miss triggered an immediate scramble across asset classes. Silver futures, which had opened the previous session at $59.75—down 1.3% from Thursday’s close—surged past $61 and briefly touched $62.10 in intraday trading.
Yet the labour market picture was not entirely soft. The unemployment rate unexpectedly fell to 4.2%, though largely because workers dropped out of the labour force. Wage growth accelerated to 3.5% year-on-year, a figure that could keep the Fed wary of declaring victory over inflation. The leisure and hospitality sector shed 61,000 jobs despite the tourism boost from the Football World Cup, clouding the outlook for consumer spending.
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Meanwhile, a separate source of tailwind emerged from the Middle East. Indirect talks between the United States and Iran, held in Qatar, have shown enough progress to encourage a partial resumption of oil shipments through the Strait of Hormuz. Crude prices have eased as a result, taking some of the sting out of global inflation concerns. Lower energy costs reduce the urgency for aggressive rate tightening, a dynamic that has historically supported safe-haven assets like gold and silver.
Friday’s rally marked a sharp reversal from the week’s earlier turmoil. On Thursday, silver had plumbed a seven-month low before Warsh’s Sintra comments triggered a rebound. The extreme volatility, traders said, reflected a market caught between a structural deficit story and shifting macro signals. Prior to this week’s events, silver had posted a year-on-year gain of 173.3% as of May 14, a staggering run built on industrial demand and supply constraints.
The near-term path remains highly data-dependent. With the official jobs number now in the rear-view mirror, attention turns to how quickly the Fed revises its own forecasts. If wage pressures and a tight labour market persist, the central bank could keep rates elevated longer than current pricing implies, capping further gains. For now, however, the combination of a dovish pivot, a weak payroll, and calming oil markets has given silver bulls a powerful tailwind.
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