Key Highlights

• Silver prices climbed 3.76 percent above 61.30 dollars per ounce, recovering from seven-month lows.

• June nonfarm payrolls rose by just 57,000, the lowest in four months and far below the 110,000 forecast.

• Fed funds futures now show less than a 50 percent chance of a September rate hike, down from 67 percent before the report.

• Falling oil prices tied to improving Strait of Hormuz flows added further support by easing inflation pressures.

Silver Rebounds Sharply From Multi-Month Lows

Silver prices climbed above 61 dollars per ounce on Thursday, rising 3.76 percent and recovering from seven-month lows as markets sharply reduced expectations for further Federal Reserve interest rate hikes. The move followed a weaker-than-expected June jobs report, which showed the US economy added just 57,000 positions, the lowest total in four months and far short of the 110,000 forecast.

The labor market softness extended across multiple indicators, with leisure and hospitality losing 61,000 jobs even with a tourism lift tied to the World Cup. The unemployment rate unexpectedly dropped to 4.2 percent as workers exited the labor force, while wage growth ticked up modestly to 3.5 percent year over year.

Rate Expectations Shift Sharply Following Jobs Miss

The disappointing employment data triggered a significant repricing of Federal Reserve policy expectations. Fed funds futures now indicate less than a 50 percent probability of a rate hike at the September meeting, a sharp decline from the 67 percent probability priced in prior to the report's release.

This shift followed remarks a day earlier from Fed Chair Kevin Warsh, who acknowledged that inflation expectations had eased while maintaining the central bank's stated commitment to price stability. As with gold, silver's rally reflects reduced expectations for tighter monetary policy, which lowers the opportunity cost of holding non-yielding precious metals.

Falling Oil Prices Reinforce the Rally

Silver's gains were further supported by developments in energy markets, where rising oil shipments through the Strait of Hormuz and progress in indirect US-Iran talks pushed crude prices lower. This decline in energy costs contributed to easing broader inflation pressures, compounding the impact of the weaker jobs data on precious metals sentiment.

Silver's sharp rebound from seven-month lows suggests the metal had been pricing in a considerably more hawkish rate path prior to the jobs report, leaving room for continued gains if subsequent data confirms a genuine slowdown in labor market momentum. However, silver's historically higher volatility relative to gold means further price swings, in either direction, remain a distinct possibility as markets digest additional economic releases.

Conclusion

Silver's sharp rally mirrors the broader precious metals rebound triggered by unexpectedly weak June employment data and the resulting shift in Federal Reserve rate hike expectations. Easing oil prices have added further support by reducing near-term inflation concerns. The durability of this rebound is likely to hinge on whether upcoming economic reports reinforce the labor market softening signaled by June's jobs data.