Silver prices extended their upward trajectory during Thursday's Asian trading session, marking a third consecutive day of gains and trading around $59.60 per ounce. This rally is primarily driven by a shift in macro policy expectations and synchronized volatility in risk assets, leading to a notable improvement in sentiment across the precious metals sector.
The core driver behind silver's ascent stems from marginal adjustments in market expectations for Federal Reserve policy. In recent remarks, Federal Reserve officials have emphasized that inflation remains elevated but also noted that inflation expectations have moderated, while refraining from signaling further near-term interest rate hikes. This neutral-to-slightly-dovish communication has tempered market expectations for imminent rate increases, thereby reducing the opportunity cost of holding non-yielding assets and providing support for silver.
Concurrently, a significant pullback in global energy prices has further reinforced the bullish narrative for precious metals. The crude oil market has weakened notably due to the resumption of shipping through the Strait of Hormuz and progress in U.S.-Iran negotiations, significantly alleviating concerns over supply shortages and resurgent inflation. As a key component of inflation expectations, the decline in energy prices directly curbs expectations for rising real interest rates, indirectly benefiting silver and other precious metal assets.
From a macroeconomic data perspective, recently released U.S. indicators have generally shown signs of cooling. June ADP employment increased by only 98K, falling short of the 113K expectation, while the ISM Manufacturing PMI retreated to 53.3, also below market forecasts. These figures reinforce the assessment of slowing economic momentum, shaking market confidence in the Fed's ability to maintain a high-interest-rate path for an extended period.
Under the influence of these multiple factors, market risk appetite has undergone a periodic adjustment, with capital beginning to flow from high-valuation risk assets back into defensive assets like precious metals. Silver, possessing both industrial and safe-haven attributes, receives dual support in an environment of declining inflation expectations and looser policy expectations, exhibiting relative resilience compared to gold.
However, the market remains highly cautious, with its core focus centered on the upcoming U.S. non-farm payrolls data. This data will directly influence the market's repricing of the Fed's interest rate path. A significantly weaker-than-expected employment report could further strengthen expectations for rate cuts or a pause in tightening; conversely, stronger data may limit the upside for precious metals.
From a daily chart perspective, silver has staged a consecutive rebound after breaking out of a recent low consolidation range, with the short-term trend showing some repair, though the overall structure remains within a high-level oscillation pattern. The current price is gradually approaching a previous resistance zone. A failure to sustain a high-volume breakout could lead to a period of high-level consolidation. Key overhead resistance levels are concentrated around $61.50 and $63.00, with support levels located near $59.00 and $57.50.
On the 4-hour chart, silver shows a steady upward structure with short-term moving averages maintaining a bullish alignment, although momentum is beginning to gradually slow. While the MACD indicator remains in positive territory, the expansion speed of its histogram is weakening, indicating a gentler pace of ascent. If the price holds above the $60 level, a continuation of the oscillatory uptrend remains possible, but short-term caution is warranted against potential volatility induced by the non-farm payrolls data.
Silver is currently in a rebound cycle driven jointly by policy expectations and inflation expectations. While the short-term trend is biased towards strength, it has not yet formed a clear unilateral breakout structure, exhibiting more of a volatile upward pattern. The combined pressure from falling energy prices and cooling economic data on real interest rate expectations provides silver with periodic support. However, ahead of the non-farm payrolls release, market volatility is likely to amplify significantly, and the continuation of the trend still requires confirmation from further fundamental developments.
In summary, silver's recent gains are primarily propelled by a dovish shift in Fed expectations, weaker U.S. economic data, and the retreat in energy prices, forming a classic macro easing expectation trade. Short-term market sentiment leans bullish, but the sustainability of the trend depends on the performance of U.S. employment data. Ahead of the data release, silver is likely to maintain a high-level consolidation pattern. Weaker-than-expected data could potentially open further upside, while stronger data might trigger a phase of profit-taking pressure.
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