Silver Nears $61 as Soft Jobs Data Caps Fed Hikes

Key Moments

Silver Advances on Rate-Sensitive Flows

Silver prices (XAG/USD) moved higher during Asian trading on Friday, with the metal hovering around $61.00 per troy ounce after a decline in the previous session. The non-yielding asset drew renewed interest as weaker-than-anticipated US labor data tempered expectations for additional interest rate hikes by the Federal Reserve.

Following the latest employment figures, derivatives markets reflected a growing conviction that the Fed would keep its benchmark rate steady at the upcoming October policy meeting. The implied probability of no change in rates rose to 77.9% from 74% before the data release, signaling a shift in market sentiment toward a more cautious view on further tightening amid signs of cooling labor conditions.

US Labor Data Drives Repricing of Fed Outlook

The reassessment of the Fed path was triggered by a softer US Nonfarm Payrolls report for September. Payrolls increased by only 29,000 jobs, substantially below consensus expectations for a 90,000 gain and sharply lower than the revised August figure of 133,000. The data added to evidence that momentum in the labor market is slowing.

Additional indicators pointed to emerging slack. The US unemployment rate ticked up to 4.2%, while the labor force participation rate inched higher to 61.8%. Together, these developments reinforced the view that policymakers may be more inclined to pause rather than push ahead with further rate increases.

Middle East Turmoil Bolsters Safe-Haven Demand

Alongside the shift in rate expectations, geopolitical risk added another layer of support for silver and other safe-haven assets. Conditions in the Middle East deteriorated as Saudi-backed forces in Yemen launched a major campaign to retake areas held by Houthi fighters.

Tensions intensified after the Iran-aligned Houthis took control of the Bab el-Mandeb strait, a strategic maritime corridor linking the Red Sea to the Gulf of Aden. The passage is described as a key route for regional crude exports, offering an alternative path that bypasses the Strait of Hormuz. The risk to shipping lanes and energy flows helped underpin investor demand for perceived havens, including precious metals.

Rates Market Views After the Yield Backup

Analysts at TD Securities attributed the recent rise in yields to “higher Fed pricing, growth expectations, and oil,” but noted that the environment now appears to be turning less restrictive. Their rates team stated that “rates should breathe a sigh of relief” as those pressures ease.

Their assessment aligns with the post-payrolls reaction in US Treasuries, where a bull-steepening move unfolded as traders backed away from pricing additional near-term Fed hikes. The combination of softer labor data and fading repricing pressures pointed toward a more supportive backdrop for interest-rate-sensitive assets like silver.