During the European session on Wednesday, June 3rd, the price of silver experienced a decline of over 1.4%, falling to around $74.00 per ounce. Renewed escalation in US-Iran tensions pushed oil prices higher for a third consecutive trading day, and the resulting negative correlation between crude oil and precious metals is currently weighing on silver. Furthermore, unexpectedly strong US JOLTS job openings data for April has added to the downward pressure on the white metal.
Oil Price Rebound Pressures Silver
On Wednesday, WTI crude oil prices rose by more than 2% to near $96.00, reaching their highest level in over a week. The immediate catalyst for the oil price surge was a renewed escalation in US-Iran military conflict—Iran's missile launches towards Kuwait and Bahrain, and the US military's retaliatory strikes on Qeshm Island—reigniting market fears of supply chain disruptions in the Middle East.
Since the outbreak of conflict in the Middle East, a clear negative correlation has emerged between oil prices and precious metals. The transmission logic is as follows: rising energy prices increase global inflation expectations, forcing traders to reassess the policy paths of major central banks. Specifically concerning the Federal Reserve, the market has gradually ruled out the possibility of a rate cut this year, with some institutions even beginning to price in the risk of a rate hike by the end of 2026. This shift in policy expectations directly diminishes the appeal of non-yielding assets like silver, as the opportunity cost of holding them increases with rising expectations for real interest rates.
Consequently, although geopolitical risks typically favor safe-haven assets, within the current "oil prices → inflation → rate hike expectations" transmission chain, silver is instead pressured by the relative strength of the US dollar and the hawkish shift in interest rate outlooks. As long as this logic remains intact, the negative correlation between oil and silver prices is likely to dominate short-term price action.
US-Iran Conflict Escalates Again
Tensions between the US and Iran escalated sharply following reciprocal attacks on Tuesday evening. According to a statement from Iran's Revolutionary Guards, US forces attacked an Iranian oil tanker and struck a communications station on Qeshm Island. Iran subsequently responded with missile and drone strikes targeting the US Navy's Fifth Fleet headquarters in Bahrain. US Central Command stated that missiles launched by Iran towards Kuwait and Bahrain were either intercepted or fell short, and that US forces had conducted defensive airstrikes on Qeshm Island, denying any attack on the Fifth Fleet.
The conflict quickly affected the Gulf region. Kuwait sounded nationwide air raid sirens, alarms were heard in Bahrain, and several countries suspended airport operations.
The rise in geopolitical risk directly pushed oil prices higher. In turn, the increase in oil prices indirectly pressures silver through the "energy shock → inflation expectations → rate hike expectations" transmission chain: higher oil prices reinforce market expectations for the Fed to maintain a hawkish stance, thereby increasing the opportunity cost of holding non-yielding assets like silver, placing short-term pressure on its price.
US Labor Data Exceeds Expectations
Simultaneously, US JOLTS job openings for April surged to 7.618 million, significantly surpassing the market forecast of 6.88 million and marking the largest increase in five years. This data indicates that, despite the Federal Reserve's ongoing monetary policy tightening, labor demand remains robust.
An analyst at Edgen Macro noted, "The magnitude of this upside surprise removes one of the key arguments supporting a near-term rate cut. The Fed will see this as confirmation that labor demand is still too strong to justify policy easing." Market bets on a 2026 rate cut have further cooled, with some institutions even beginning to price in the possibility of a rate hike by year-end.
For silver, strong labor data implies rising expectations for real interest rates, increasing the opportunity cost of holding non-yielding assets. Under the dual pressure of the US-Iran conflict pushing oil prices higher and the JOLTS data reinforcing tightening expectations, silver faces significant headwinds in the short term, with the market now awaiting guidance from Friday's Nonfarm Payrolls report.
What to Watch Next
Looking ahead, investor focus is shifting to the upcoming US Nonfarm Payrolls report for May, scheduled for release on Friday. Following the unexpected surge in April's JOLTS data, market attention on the labor market has reached a new peak. The report is expected to show the addition of approximately 85,000 jobs in May, with the unemployment rate holding steady at 4.3%.
This report is crucial for two primary reasons. First, it will verify whether the strong signal from the JOLTS data is persistent—if Nonfarm Payrolls also exceed expectations, it would completely extinguish any remaining market hopes for a rate cut this year and could even push forward expectations for a potential hike. Second, the NFP report will directly influence the policy tone of the Federal Reserve's upcoming June meeting. With oil prices high and geopolitical risks ongoing, a resilient jobs market would give the Fed stronger grounds to maintain or even intensify its hawkish stance.
For silver, the direction of the Nonfarm Payrolls data will likely determine its short-term price trajectory. Strong data would likely boost the US dollar and Treasury yields, potentially pushing silver prices lower. Conversely, weak data could offer the metal a reprieve. Regardless of the outcome, Friday's NFP report is poised to be the market's next key turning point.
In summary, silver currently faces pressure from two fronts: first, the rebound in oil prices is pushing inflation expectations higher, diminishing the likelihood of Fed rate cuts; second, unexpectedly strong US labor market data is reinforcing tightening expectations. Against the backdrop of the ongoing US-Iran conflict, the negative correlation between oil and silver prices may continue to dictate short-term movements. The market is now awaiting Friday's Nonfarm Payrolls report for the next directional cue.
Technical Analysis
From a technical perspective, spot silver is experiencing selling pressure and consolidating on the daily chart, operating within a short-term range. Spot silver is currently trading around $74.30, below its 20-day and 50-day moving averages. Resistance is found near $76.12 and $78.12, while support forms at the previous low of $71.77 and the long-term 200-day moving average at $67.25. The price has rebounded but faced resistance, leading to a pullback. The MACD indicator is operating below the zero line, with bearish momentum persisting. The RSI has declined to 45.3, indicating weakness but not oversold conditions. Resistance from moving averages above is capping gains, while support at lower levels is limiting the downside. Bullish and bearish forces are relatively balanced, suggesting silver is likely to maintain a range-bound consolidation between $71.78 and $76.12 in the short term, with a focus on the direction of any breakout from this range.
As of 15:04 Beijing time on June 3rd, spot silver was quoted at $74.30 per ounce.
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