Silver recovers to $30.60 on Fed rate-cut prospects

Silver recovered further to $30.60 in Thursday’s Asian trading.

The white metal discovers strong buying interest, as normalising US labour market conditions boost speculation that the Federal Reserve will start reducing interest rates in the September meeting.

The CME FedWatch tool shows that traders see a 68% chance for rate cuts in September.

The probability has significantly improved from 47% recorded a week ago. This has weighed heavily on US bond yields. 10-year US Treasury yields are slightly up to near 4.29%, but have come down significantly from a weekly high of 4.64%.

A sharp decline in yields on interest bearing assets reduces the opportunity cost of holding an investment in non-yielding assets, such as Silver.

Investors are losing confidence over US labour market strength after weak JOLTS Job Openings data for April and lower-than-expected ADP Employment Change for May.

The DXY Dollar Index fell sharply after failing to extend recovery above 104.40, but holds the immediate support of 104.00.

The next move in above-mentioned assets will be influenced by the US Nonfarm Payrolls (NFP) report for May, which will be published on Friday.