By contrast, the ISM Services PMI edged up to 52.6, modestly outperforming expectations and signaling continued expansion in the country’s largest economic sector.
Rate-Cut Expectations Rise but Caution Prevails
Markets now assign an 89% probability of a 25-basis-point rate cut at next week’s Federal Open Market Committee (FOMC) meeting, according to the CME FedWatch Tool, up sharply from 71% just one week earlier. Lower interest rates typically support precious metals by reducing the opportunity cost of holding non-yielding assets, but sentiment remains fragile as investors await additional data.
“Traders are positioning for a dovish pivot, but the Fed has left itself room to react to inflation surprises,” said one London-based metals strategist.
The September PCE inflation report, delayed due to government data disruption and expected Friday, is now viewed as the critical release guiding near-term policy expectations.
Jobless Claims and Volatility Risks in Focus
Weekly Initial Jobless Claims, due later today, could add further clarity on whether labor-market conditions are weakening enough to justify easier monetary policy. Economists expect only a modest uptick, but any deviation could spark short-lived volatility across precious metals.
Silver, which has outperformed gold in recent sessions due to solid industrial demand and tightening supply dynamics, is also sensitive to macro shifts. Analysts note that continued economic slowdown in the United States or Europe could temper physical demand, even as monetary easing offers support.