Silver has staged a notable recovery, climbing back above the $60 per ounce mark after a brutal selloff in June. The metal's three-day winning streak reflects a shift from a purely technical bounce to a macro-driven trade, as softer US data, lower oil prices, and a slightly less forceful message from Federal Reserve Chair Kevin Warsh have eased pressure on non-yielding assets.
Spot silver traded near $60.20 in Asian hours on Thursday, extending its rebound. The move comes as the dollar softened and investors reassessed the likelihood of aggressive Fed tightening. While Warsh did not turn dovish at the ECB Forum in Sintra—reiterating the Fed's commitment to its 2% inflation target and defending the central bank's independence—his acknowledgment that inflation risks had eased in recent weeks reduced the sense that an immediate rate increase is unavoidable.
This distinction is critical for silver. The metal offers no yield, making it sensitive to rising borrowing costs. Any pullback in rate-hike urgency can quickly improve sentiment, especially after a steep decline. The rally does not mean rate risk has disappeared, but traders now have enough reasons to test whether the worst of the selloff is over.
Softer Data Cools Hawkish Expectations
Wednesday's US data added to the case for a less aggressive Fed path. ADP reported that private employers added just 98,000 jobs in June, below forecasts and down from 122,000 in May. The ISM manufacturing index also eased to 53.3 from 54, while its prices-paid gauge fell sharply. These numbers do not point to a weak economy, but they suggest that labor demand and factory momentum are cooling at the margin.
For traders, that is enough to take some heat out of the hawkish Fed trade ahead of the nonfarm payrolls report. The market focus now shifts to Thursday's official jobs data. A softer payrolls print would strengthen silver's recovery case by weighing on the dollar and yields, while a stronger number could quickly revive expectations that the Fed will have to tighten again. As noted in our earlier analysis, Gold Breaks $4,000 on Soft Data, But Traders Hold Back Ahead of Jobs Report, the precious metals complex is closely tied to labor market outcomes.
Lower Oil Eases Inflation Pressure
Silver also drew support from the energy market. Oil prices fell after indirect US-Iran talks in Doha ended with some progress but no final settlement. Brent crude slipped toward $70 a barrel as investors judged that immediate supply risks around the Strait of Hormuz had eased. Lower crude prices reduce one of the main inflation threats that had been feeding rate-hike expectations, providing some relief for precious metals even though geopolitical risks have not vanished.
The interplay between energy costs and monetary policy remains a key theme. As we highlighted in Silver Plunges to 6-Month Low as Dollar Strength and Hawkish Fed Reshape Metals Outlook, the metal's trajectory is heavily influenced by the dollar and Fed expectations.
What's Next for Silver?
For now, silver's rebound looks credible but not risk-free. The metal has reclaimed the $60 level, yet the next move depends heavily on US payrolls, the dollar, and whether oil remains calm. Without confirmation from those drivers, the rally may remain vulnerable to another round of selling. Traders will be watching Friday's jobs data closely—a soft print could propel silver toward $62, while a strong number might trigger a retest of recent lows.
This article is for informational purposes only and does not constitute financial advice.
