On Thursday (August 6) during Asian trading hours, spot silver briefly reached a new high of $62.87 per ounce, its highest level since July 7, before retreating somewhat and currently trading around $62.00 per ounce. This rise in silver prices was supported by two factors: an agreement reached between Iran and Oman on a temporary shipping route in the Strait of Hormuz, pushing down oil prices and easing inflation concerns; and at the same time, significantly weaker-than-expected US ADP employment data, further reinforcing market expectations of a decline in Federal Reserve interest rate hikes. Against this backdrop, silver prices continued to receive buying support.

Hormuz Provisional Agreement

One of the core drivers of this round of silver price increases comes from the latest developments in the Strait of Hormuz situation. Reports indicate that Iran and Oman have reached an agreement on a temporary shipping route through this strategic waterway, and a joint statement is in the final drafting stage. Although the temporary route is expected to operate for two to four months, and Iran has made it clear that this does not represent a complete reopening of the strait, this news has been enough to push down oil prices and significantly alleviate market concerns about energy-driven inflation. For silver, the easing of inflation concerns works through two paths: first, lower oil prices directly reduce production and transportation costs, easing overall price pressure; second, the decline in inflation expectations is prompting the market to repric the Federal Reserve's interest rate path, further cooling expectations of rate hikes and providing a favorable macroeconomic environment for silver, a zero-yield asset.

US employment data: ADP figures significantly missed expectations, fueling expectations of an interest rate cut.

US economic data provided additional support for silver. Wednesday's ADP private sector employment report showed that only 44,000 jobs were added in July, a significant slowdown from June's 98,000 and far below market expectations of 70,000. This weakness exceeded most analysts' expectations, further reinforcing the assessment that the labor market is cooling. Against this backdrop, market bets on further interest rate hikes by the Federal Reserve continued to decline. Currently, the market is pricing in a probability of a 25 basis point rate hike by the Fed in September at about 60%, lower than before the July meeting. For silver, a zero-yield asset, the decline in rate hike expectations directly reduces the opportunity cost of holding silver, providing strong support for silver prices. The market is now closely watching Thursday's US initial jobless claims and Friday's non-farm payroll report for further confirmation of the cooling trend in the labor market.

Institutional Views

TD Securities, a well-known institution, points out that the current structure of the crude oil market indicates that recent price fluctuations are driven more by positioning factors than by substantial changes in supply and demand fundamentals. Analysts emphasize that the crude oil forward curve remains strong, which is the clearest signal that "speculative funds chasing news headlines are driving price volatility, rather than fundamental easing." The resilience of the forward curve suggests that even if geopolitical news triggers short-term fluctuations, the physical market remains tight. This assessment is significant for silver. If the tightness in the crude oil market is confirmed in the forward curve, it means that inflationary pressures will not easily subside, which will limit the Federal Reserve's room for interest rate cuts to some extent. On the other hand, current price fluctuations are mainly driven by speculative funds, and any reversal of geopolitical news could trigger a sharp rebound in oil prices, thereby reigniting inflation concerns—which has a dual impact on silver.

Fed's Cook's speech: Hawkish tone but rate hikes are conditional

Federal Reserve Governor Tim Cook's remarks on Wednesday provided additional information for the silver market. Cook stated that she would support raising interest rates if inflation remains too high. Her speech scored above historical averages, delivering a stronger hawkish signal than benchmark expectations, but also emphasized that rate hikes are conditional—depending on the failure of disinflationary trends to re-emerge. This hawkish tone supported the dollar but posed potential downward pressure on risk-sensitive assets such as silver.

Summarize

Spot silver has risen for three consecutive trading days and is currently trading around $62.20 per ounce, holding onto the gains of the previous three days. The temporary agreement on the Strait of Hormuz pushed oil prices lower, easing inflation concerns; the significantly weaker-than-expected US ADP employment data further reinforced market expectations of a decline in Fed rate hikes. These two forces have jointly propelled silver prices steadily upward. Analysts point out that the crude oil futures curve remains strong, with speculative funds rather than easing fundamentals dominating recent price fluctuations. Fed Chair Cook retained the option of raising interest rates but emphasized its conditionality, leaving policy space for the market. The market will focus on Thursday's initial jobless claims and Friday's non-farm payroll report to verify whether the cooling trend in the labor market continues, which will be a key variable determining whether silver prices can rise further to $63. (Spot silver daily chart, source: EasyTrade) At 14:00 Beijing time on August 6, spot silver was trading at $62.02 per ounce.