On Monday, the price of silver (XAG/USD) fell, possibly marking the fourth straight decrease. The dollar’s decline and rumours about the U.S. Federal Reserve’s projected suspension of interest rate hikes were the causes of the initial surge. The luster was short-lived, though, as Monday was a U.S. bank holiday, so traders needed to be ready for muted price changes and subpar trading volume.

Treasury yields were impacted by the most recent U.S. jobs statistics, which showed that the unemployment rate for August was 3.8%, the highest since February 2022. Although there was excitement since the U.S. added more jobs than expected, the initial enthusiasm was dampened when the estimates for June and July were retroactively revised downward by 110,000.

Discussions have been sparked by the Fed’s attitude amid inflation worries, particularly Chairman Jerome Powell’s statements that suggested future rate increases may be necessary to control persistent inflation. The general consensus is that the Fed may decide against more rate increases this year due to the worsening labour market. According to the markets’ projections given the impending Fed decisions and the FedWatch tool from CME, there is a 93% chance that rates will remain steady at the September meeting.

Economic indications are in favour of silver, and declining inflation and a loosening labour market are adding to the belief that the U.S. economy is more likely to slow down than implode. The Fed’s predicted halt to interest rate increases may cause the currency to weaken, favouring silver prices.

Given that seven Fed officials are anticipated to make public appearances this week, the relationship between rates and silver prices is essential. Silver’s short-term outlook is gloomy, but the market is still optimistic about long-term gains.

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