Silver (XAG/USD) reverses early losses on Friday and climbs back above the $36.50 mark, buoyed by a broad-based sell-off in the US Dollar (USD) after the latest Nonfarm Payrolls (NFP) report surprised to the downside.

The July Nonfarm Payrolls (NFP) report delivered a significant downside surprise. The US Bureau of Labor Statistics reported that the US economy added just 73,000 jobs, well below the 110,000 expected. Adding to the dovish tone, June's payrolls were revised sharply lower to 14,000 from a previously reported 147,000. The Unemployment Rate ticked higher to 4.2%, in line with forecasts, while wage growth remained steady, with Average Hourly Earnings rising 0.3% MoM and 3.9% YoY. The Unemployment Rate ticked up to 4.2% in July, matching expectations and rising slightly from 4.1% in June.

In the manufacturing sector, the S&P Global Manufacturing PMI (Final) rose slightly to 49.8 in July, beating expectations of 49.7 and improving from 49.5 previously. However, the more closely watched ISM Manufacturing PMI fell short of forecasts, dropping to 48.0 from 49.0, signaling ongoing contraction in factory activity.

The softer-than-expected US jobs data triggered a sharp decline in US Treasury yields and reignited speculation that the Federal Reserve (Fed) could begin cutting interest rates as early as September. This shift in sentiment weighed heavily on the Greenback, boosting demand for non-yielding assets like Silver. According to the CME Fed watch tool, markets are now pricing in an 82% probability of a rate cut at the Fed's September meeting a steep surge from just 37% prior to the release as traders reassess the central bank's policy path in light of the cooling labor market.

Source: Fxstreet