XAG/USD Drops as Investors Cash in Profits: Silver Prices Forecast

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The Impact of U.S. Jobs Data on Silver Prices

Last Friday, silver prices surged following the release of key U.S. jobs data, signaling a softening labor market. This data has led to increased expectations for a Federal Reserve interest rate cut in September. While U.S. non-farm payrolls grew by 206,000 jobs in June, surpassing economist estimates, revisions in job growth figures for May and April have highlighted concerns. With the unemployment rate rising slightly to 4.1%, the market is closely monitoring economic indicators for cues on future monetary policy decisions.

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Market Reactions: What Traders Need to Know

Post the jobs report, U.S. interest-rate futures prices have maintained a 72% probability of a September rate cut and are also factoring in the likelihood of a second cut in December. Lower interest rates are making non-yielding silver more attractive to investors, contributing to the overall bullish sentiment in the market.

Currency and Treasury Yield Movements: Making Sense of the Market Trends

Following the jobs data release, the U.S. dollar weakened against other currencies, making silver more affordable for holders of foreign currencies. The decrease in yields on the benchmark U.S. 10-year Treasury note has further supported silver prices. Despite some profit-taking on Monday, market movements are closely tied to upcoming economic data releases, including inflation insights.

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Outlook and Forecast for Silver Prices

As investors await key economic data releases and Federal Reserve Chairman Jerome Powell’s testimony, the short-term outlook for silver remains cautiously bullish. If economic indicators align with expectations of a softening labor market and easing inflation, silver prices could target a return to $32.52, reaching an 11-year high. Keep a close eye on market developments for potential investment opportunities.

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