Silver (XAG/USD) traded around $66.10 per troy ounce during Asian hours on Monday, holding losses after opening at a bearish gap and remaining in negative territory [1]. The price action was driven by stronger-than-expected US employment data, with August Nonfarm Payrolls rising by 162,000, significantly above the forecast of 56,000, while the unemployment rate held steady at 4.1% and annual wage growth slowed less than anticipated to 3.1% [1]. These figures prompted traders to rapidly price in tighter monetary policy, as the CME FedWatch tool indicated a 58.3% probability of a 25-basis-point Federal Reserve rate hike in September [1].
Federal Reserve official Hammack delivered a notably hawkish message, scoring 9.2/10 on the FXS Speechtracker, well above the historical average of 7.6/10, signaling a clear shift toward tighter policy rhetoric [1]. Hammack asserted that Fed policy is 'not restrictive' and that inflation remains 'too high,' with local contacts indicating 'now is time for Fed to hike,' reinforcing expectations for additional rate increases and challenging any market anticipation of an imminent pivot [1]. The FXS Fed Sentiment Index rose by 1.14 points to 125.72, well above the neutral 100 mark, further reinforcing higher-for-longer rate expectations—a backdrop typically supportive for the Dollar and a headwind for risk-sensitive assets like silver [1].
Additional headwinds for silver emerged as rising crude oil prices stoked fears of renewed inflationary pressures following a geopolitical escalation between the US and Iran over the weekend. The US targeted three Iranian tankers in response to missile attacks on its warships, prompting Tehran to establish a new restricted zone around the Strait of Hormuz [1].
Technical analysis shows XAG/USD trading at $66.10, with a neutral near-term tone as price holds above the longer-term 50-day EMA but sits just under the nine-day EMA, hinting at consolidation after the recent advance. The 14-day RSI at 52.70 suggests modest positive momentum without entering overbought conditions. Immediate resistance is at the nine-day EMA around $66.33, and a clear break above this level would be needed to revive a stronger bullish extension [1].
CONCLUSION
Silver prices are facing sustained pressure due to hawkish Federal Reserve rhetoric, strong US employment data, and renewed inflation concerns from rising crude oil prices and geopolitical tensions. The market is pricing in a higher probability of a Fed rate hike in September, which supports the Dollar and weighs on silver. Technical indicators suggest consolidation, with resistance at $66.33 and modest positive momentum.