U.S. Treasury yields have remained steady as investors await labor market data and minutes from the Federal Reserve's December meeting. The 10-year bond yield remained at an eight-month high at 4.697%, while the 2-year bond yield hovered around 4.304%.
Recent data showed stronger-than-expected job openings and higher service sector prices, suggesting the Fed may keep interest rates on hold for an extended period of time. The ADP report forecasts job gains of 130,000 in December ahead of Friday's release of nonfarm payrolls. Traders are looking for signs of a cooling labor market that could influence Fed policy and push silver prices higher.
Strong dollar weighs on silver
The dollar strengthened on the back of strong US economic data, and expectations for aggressive rate cuts from the Federal Reserve faded. The dollar index rose to 108.55, and the dollar hit a six-month high against the yen at 157.875.
The ISM non-manufacturing PMI rose to 54.1, reflecting the economy's resilience, while input prices soared, suggesting inflationary pressures. Markets currently believe there is a 95% chance that the Fed will keep interest rates unchanged this month, with the first rate cut likely in July. A stronger dollar is a headwind for silver, limiting its upside.
Tariff uncertainty increases silver’s safe haven appeal
Silver continues to receive support from geopolitical risks related to President-elect Donald Trump's tariff policies. Trade wars and inflation concerns have increased silver's appeal as a safe-haven asset. However, rising interest rates could limit profits and could send mixed signals for traders.
