• Silver gains as oil falls following Trump’s comments downplaying near-term military action against Iran.
• Non-yielding XAG faces headwinds as CME FedWatch shows a 78%+ chance of a December rate hike.
• Robust October Nonfarm Payrolls (165K) and falling unemployment (4.1%) could boost the Greenback, capping Silver’s rally.

Silver price (XAG/USD) appreciates after two days of losses, trading around $53.00 per troy ounce during the Asian hours on Monday. Silver price advances as declining oil prices eased inflationary pressures.

Crude prices dropped after US President Donald Trump stated that further military strikes on Iran are “highly unlikely,” provided progress continues on Iran’s nuclear program and the Strait of Hormuz remains open. Trump also noted that the unpopular Middle East conflict, which pushed up energy costs, contributed to the Republicans’ recent midterm election losses.

Reuters reported that in a phone interview with CNN, Trump reaffirmed that additional military action would likely be unnecessary if Iran signs a firm agreement. Despite earlier hints at resuming major attacks after the midterms, no large-scale US military operations have been launched. Meanwhile, Iran has warned that it will retaliate against any future strikes by targeting US and Israeli assets.

However, non-yielding Silver may face challenges amid expectations of a Federal Reserve (Fed) rate hike in December. According to the CME FedWatch tool, the probability of another 25-basis-point rate hike at the December Federal Open Market Committee (FOMC) meeting has climbed above 78%.

Robust US employment figures are providing significant support for the Greenback. Specifically, Nonfarm Payrolls (NFP) increased by 165,000 in October, easily topping the market consensus of 65,000 and building on September’s revised total of 60,000, while the Unemployment Rate edged down to 4.1%, beating expectations of 4.2%. Traders are now closely watching Tuesday’s US Consumer Price Index (CPI) report and Friday’s Producer Price Index (PPI) for further signals regarding the Fed’s upcoming policy decisions.

US data and Fed speakers in focus as Dollar repricing gathers pace

Strategists at ABN Amro underline that the immediate test for the recent shift in Fed expectations and associated Dollar weakness will come from the US calendar, noting that “three US events will test the repricing of Fed expectations and the USD’s downside risks today.” They point to the combination of scheduled data releases and Fed communication as critical for validating whether markets have gone too far in scaling back tightening prospects and in pricing further downside for the USD.