Silver Holds at 7-Week High

Silver prices were above $63.5 per ounce on Monday, the highest in seven weeks, amid the view that the Federal Reserve is less likely to raise interest rates this year. Nonfarm payrolls unexpectedly dropped in July as the labor force declined. Lesser bets of a rate hike were also supported by oil prices remaining well below their Iran war peaks this year, easing energy inflation. Expectations that financial conditions will not tighten significantly benefited precious metals by decreasing the opportunity cost of holding non-yielding assets. In turn, industrial demand for silver also supported bids. Chinese imports of silver-bearing ores surged 62.5% annually in June to 219,000 tonnes. The data was in line with an expanding production for solar panels and electricity grids. Still, lingering risks of a flare-up in energy prices maintained silver relatively close to the seven-month low of $55 per ounce from July 16th.

Gold Hovers at 2-Month High

Gold prices held above $4,340 per ounce on Monday, near the highest in two months, as markets scaled back bets of a Federal Reserve rate hike this year. Signs of a softening labor market supported rate futures to reflect more positions of a hold rather than a hike in the Federal Reserve’s upcoming rate decision in September. Nonfarm payrolls unexpectedly declined in July while wages slowed, although a lower unemployment rate indicated that the labor force is declining sharply. Lower energy prices also contributed to softer risks of higher rates for bullion holders. Lesser strikes against Iran by the US were consistent with Washington’s rhetoric that a deal with Iran may be reached, driving energy costs do hold below recent peaks. Elsewhere, Chinese investors continued to increase long position on gold-backed assets for safety from volatility in tech stocks and recent signs of strength in the physical market. Gold buying was also seen by central banks, especially in Asia.