Silver is trading around $31.21, a critical level that can dictate short-term price movements. A sustained break below this pivot point would indicate a bearish outlook, with potential support zones between $30.21 and $29.59. Traders are reluctant to take large positions until there is more clarity on interest rate policy and labor market conditions.
Powell points to slower rate cuts
During a speech on Monday, Powell indicated that the Fed would likely adopt a slower pace of rate cuts of a quarter of a percentage point going forward. He emphasized that the central bank is in no rush to aggressively ease, citing strong economic growth and solid consumer spending. The statement tempered expectations for major cuts, with the CME FedWatch tool now showing a 63% chance of a 25 basis point rate cut in November, up from 47% last week.
Powell’s cautious tone could weigh on silver in the near term, as lower interest rates typically benefit non-yielding assets like silver. However, if labor market data weakens, the Fed could shift to a more accommodative stance, which would likely support silver prices.
Labor data is crucial to the Fed’s next move
U.S. labor market data due later this week, including ADP employment figures and nonfarm payrolls, could influence the Fed’s decisions. Weaker-than-expected job growth would strengthen the case for more aggressive rate cuts, potentially pushing silver higher. Furthermore, geopolitical risks, such as the escalating conflict between Israel and Lebanon, continue to provide support for silver as a safe haven.
Outlook: Volatility ahead as numbers drive Fed policy
The short-term outlook for Silver depends on this week’s economic data and Fed commentary. A bearish move is possible if labor data reinforces Powell’s dovish stance. However, weaker jobs data could spark a rally, pushing silver above $31.50 an ounce. Traders should brace for volatility as markets react to incoming data and evolving geopolitical risks.