Last Friday's US May non-farm payrolls report showed an addition of 172,000 jobs, significantly surpassing market expectations of 85,000, with the April figure revised up to 179,000, while the unemployment rate held steady at 4.3%. Against the backdrop of resilient economic and labor market conditions coupled with persistently rebounding inflation, market expectations for Federal Reserve interest rate cuts have been rapidly scaled back, while anticipation for rate hikes has further intensified. In overnight trading last Friday, domestic silver prices opened lower and continued to decline, with Monday's session extending the losses, probing the lows seen in mid-March, resulting in an intraday drop exceeding 9%. In the short term, influenced by pessimistic sentiment, silver prices may continue to exhibit weakness.
Furthermore, on the geopolitical front, US-Iran negotiations are engaged in a high-stakes tug-of-war, introducing uncertainty into predictions for the Middle East situation. Although former President Trump has repeatedly stated that both sides would reach a negotiation agreement, this expectation has so far not materialized, adding to market volatility. Looking ahead, the market's core focus lies on the Federal Reserve's June policy meeting. While the market has already priced in the possibility of a Fed rate cut this year to nearly zero, the probability of a rate hike has instead steadily increased in market pricing. However, there remains hope to glean the Fed's stance on inflation assessment and its outlook for potential rate cuts. This Wednesday will see the release of US May CPI data, requiring attention for its guidance on the Fed's subsequent actions. Should the inflation data come in higher than expected, silver prices may face continued downside risk.
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