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Silver prices fell sharply below $69 on Friday, dropping 6.74% to $68.90 amid a stronger-than-expected U.S. jobs report that bolstered the dollar. The nonfarm payrolls data showed 207,000 jobs added in August, exceeding forecasts and reinforcing expectations of a tighter Federal Reserve policy. This triggered a sell-off in dollar-sensitive commodities like silver, which typically inverses with the U.S. currency. The report also pushed the USD index to a 16-month high, amplifying pressure on the precious metal.
The decline highlights the dollar's dominance in commodity markets and the Fed's tightening bias. Traders are now pricing in a higher probability of a 50-basis-point rate hike in September, with the CME FedWatch tool showing over 75% odds. This creates a bearish environment for silver and other non-yielding assets that struggle under a strong dollar. The move also impacts global investors, as a stronger dollar raises import costs for emerging markets reliant on commodity imports.
Looking ahead, the focus shifts to the Fed's September meeting and inflation data. If the central bank signals aggressive tightening, silver could test $65 support levels. Conversely, a dovish pivot or a weaker dollar could spark a rebound. Traders should monitor the USD index and Fed funds futures for clues on policy direction, while technical indicators like the RSI and MACD may help identify short-term entry points.
