• Silver rallies as disappointing US Nonfarm Payrolls reduce expectations for an October Fed rate hike.
• Markets now price a 77.9% probability of steady Fed rates after September payrolls grew by just 29,000.
• Escalating geopolitical turmoil in the Middle East provided additional safe-haven support for precious metals.

Silver price (XAG/USD) gains ground after registering losses in the previous day, trading around $61.00 per troy ounce during Asian hours on Friday. Non-yielding Silver gains support as softer-than-expected US employment figures reduced expectations for further interest rate hikes by the Federal Reserve (Fed).

Financial markets now price in nearly a 77.9% chance that the Fed will keep benchmark interest rates steady at its upcoming October policy meeting, up from 74% before the labor report. This shift reflects growing sentiment that a cooling job market will prompt policymakers to hold rates steady.

The repricing in rate expectations follows a disappointing US labor market performance, with Nonfarm Payrolls expanding by only 29,000 positions in September. The print fell well short of Wall Street estimates targeting 90,000 additions and marked a steep slowdown from August’s revised figure of 133,000. Further signaling labor slack, the US unemployment rate rose slightly to 4.2%, even as the labor force participation rate edged upward to 61.8%.

Meanwhile, safe-haven demand remains supported by deteriorating geopolitical conditions in the Middle East as Saudi-backed forces in Yemen launched a major offensive to reclaim territory from Houthi forces. Tensions escalated sharply after the Iran-aligned group seized control of the Bab el-Mandeb strait, a crucial maritime chokepoint between the Red Sea and the Gulf of Aden that provides a vital bypass route for regional crude exports, avoiding the Strait of Hormuz.

US rates seen easing as recent repricing pressure fades

According to TD Securities, the recent backup in yields has been driven by “higher Fed pricing, growth expectations, and oil,” but their rates strategists now believe that “rates should breathe a sigh of relief” as that pressure abates. Set against the backdrop of the post-payrolls bull-steepening in US Treasuries and markets sharply pricing out further near-term Fed hikes, TD’s view underscores a shift toward a more benign rates environment after the latest bout of repricing.