Silver (XAG/USD) rebounded on Tuesday, trading around $58.80, up 0.96% at the time of writing, after finding support near $56.60 earlier in the day [1]. Despite this recovery, the metal remains under pressure due to prevailing market expectations that the Federal Reserve's next policy move will be another interest rate hike [1]. According to the CME FedWatch tool, investors now see nearly an 80% chance that the Fed will deliver at least one additional rate hike before the end of the year [1]. Higher interest rates increase the opportunity cost of holding non-yielding assets such as silver, which continues to weigh on investor demand for precious metals [1].
Market participants are closely watching upcoming US labor market data, with the Job Openings and Labor Turnover Survey (JOLTS) for May due at 14:00 GMT. Economists expect employers to have posted 7.3 million job openings, down from 7.618 million in April [1]. A sharper-than-expected slowdown in the labor market could temper expectations for further monetary tightening, while a stronger reading would reinforce bets on additional rate hikes [1].
The key event of the week will be Thursday's US Nonfarm Payrolls (NFP) report for June, which investors will monitor closely after Fed Chair Kevin Warsh stated that the central bank's forward guidance is no longer well-suited to the current monetary policy environment [1]. The outcome of these labor reports is likely to influence both silver prices and broader market expectations regarding the Fed's next moves [1].
CONCLUSION
Silver's rebound is constrained by strong expectations of further Fed rate hikes, with investors assigning nearly an 80% probability to at least one more increase this year. Upcoming US labor market data, particularly the JOLTS and Nonfarm Payrolls reports, are expected to play a pivotal role in shaping both silver prices and monetary policy expectations.