• Silver price exhibits gains above $27.00 due to deepening optimism over Fed reducing rates in September.
• Weak US labor market boosts expectations of Fed rate cuts.
• Lower bond yields improve demand for Silver.

Silver price (XAG/USD) falls slightly from weekly high of $27.50 but manages a firm-footing above the crucial support of $27.00 in Tuesday’s late European session. The white metal holds strength as investors remain optimist about the Federal Reserve (Fed) reducing interest rates in the September meeting.

The speculation for the Fed lowering interest rates from September have strengthened as recent United States economic data for April has indicated that the economy is struggling to cope with the restrictive interest rate framework by the Fed.

The US Nonfarm Payrolls (NFP) report released on Friday indicated fewer job additions, higher Unemployment Rate and slower wage growth. Signs of easing labor market conditions build confidence of the Fed pivoting to interest rate cuts from September. Cooling labor market conditions suggest a soft inflation outlook.

10-year US Treasury yields fall to 4.46%. A decline in yields on interest-bearing assets reduces the opportunity cost of holding investment in non-yielding assets, such as Silver. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades above 105.00.

Meanwhile, deepening risks of Israel extending operation to Rafah, the southern part of Gaza, have improved the appeal of bullions. The Israel assault at Gaza is expected to worsen further as it has denied ceasefire proposal, which was agreed by Hamas, stating that it doesn’t meet their demands. Risks of geopolitical uncertainty are favorable for safe-haven assets such as Silver