Analysts hope that if future U.S. job data shows signs of a weakening of the labor market, the Fed will be forced to cut interest rates and further strengthen its bullish prospects for gold .
As silver demand sways, silver faces turn
Silver (XAG/USD) is under pressure and is trading at $32.17 after hitting a low of $32.13. Watch the market ahead of the US Non-Agricultural Payroll (NFP) report as investors await signals in the Fed's next move. A stronger than expected employment report could strengthen the US dollar by focusing on silver prices.
Additionally, silver, which has important industrial uses, adds tension from ongoing trade tensions. Concerns over declining manufacturing demand due to supply chain disruptions have curtailed silver bullish momentum. However, if the Fed shows a more incredible attitude, the silver can find support by lowering the Treasury yield.
US job data and Fed policy shape market outlook
The latest US unemployment claims report has increased from the past 208,000 to 219,000, indicating the potential weakness of the labor market. This has strengthened expectations that the Fed may pursue further interest rate cuts in 2025. US Treasury Secretary Scott Bescent has shown that the administration is not very interested in the Fed's policy direction, but is focused on lowering Treasury yields for the decade.
Meanwhile, Federal Reserve officials remain divided into inflation risks. Chicago Federal President Austan Ghoolsby downplayed inflation concerns, but Dallas Free President Rory Logan noted that the labour market remains strong enough to slow down speed cuts. Despite the mixed signal, the US dollar was unable to gain significant traction, allowing gold to maintain its upward momentum.
As investors prepare for future NFP reports, all eyes will remain on employment trends. As employment growth weakens, gold prices can extend rallies in response to expectations of loose monetary policy. Conversely, strong labor market readings could increase the dollar and put pressure on gold.
