Gold prices fell during Thursday’s trading session as the US dollar strengthened against most major currencies, pulling the precious metal slightly away from its record levels following the release of economic data.

According to ADP data published Thursday, the US private sector added 54,000 jobs in August, below expectations of 75,000 and down from July’s 104,000. Meanwhile, the US Department of Labor reported that initial jobless claims rose by 8,000 to 237,000 in the week ending August 30, the highest since late June, compared with forecasts of 230,000.

In a separate release, the Institute for Supply Management (ISM) said its services PMI rose to 52 in August from 50.1 in July, signaling renewed expansion.

According to CME FedWatch, the probability of a Federal Reserve rate cut in September climbed to 97.4% following the ADP report, up from 96.6% the previous day.

Meanwhile, the US dollar index rose 0.2% to 98.3 at 20:12 GMT, after reaching a high of 98.4 and a low of 98.08.

In commodities trading, spot gold fell 0.8% to $3,605 per ounce at 20:13 GMT.

Silver prices surged above $40 an ounce on Monday for the first time in more than a decade, fueled by mounting bets that the US Federal Reserve will cut interest rates this month.

Spot silver rose 2.04% to $40.55, its highest since September 2011, before easing back to $41.34 on Thursday, down 1.7%.

Analysts attributed the latest rally to reduced liquidity during the US bank holiday, which bolstered safe-haven metals like gold and silver. Expectations of Fed rate cuts and a tight supply backdrop further supported the move.

Ole Hansen, head of commodity strategy at Saxo Bank, said: “Silver has broken above $40 an ounce to its highest in 14 years, extending a rally that has already delivered 37.5% gains this year. By comparison, gold is up 31% in the same period, but silver’s outperformance reflects its dual role as both an investment asset and an industrial metal.”

Hansen noted the surge is not the start of a new trend but part of an ongoing rally since 2022, underpinned by the same macroeconomic forces lifting gold. He pointed to heightened expectations of rate cuts, Trump’s tariff policies that risk dampening growth while keeping inflation elevated, concerns about Fed independence, and rising geopolitical risks.

He added that silver’s relative cheapness compared to gold gave it extra momentum, with the gold-to-silver ratio near 85, above the five-year average of 82. While gold needs new record highs to extend its rally, silver still trades below its 2011 peak near $50, leaving scope for further investor demand.

Industrial Demand Stays Strong

Hansen emphasized silver’s unique industrial underpinning: “Silver shares the same macro drivers as gold—dollar, real yields, rate sensitivity—but also benefits from robust industrial demand, especially in solar and electrification.”

Forecasts suggest another notable supply deficit this year, albeit smaller than 2024. Structural shortages have repeatedly limited downside corrections even during periods of dollar strength or reduced easing expectations.

After breaking through resistance near $35 in June, silver has tended to find buyers on dips, with volatility higher than gold due to its hybrid role.

The rally coincided with gold hitting a four-month high at $3,483.59 on Monday, up 1.03%. Unlike gold, however, silver’s demand is split almost evenly between investment and industry, giving it two growth engines. Photovoltaics alone account for about 20% of global demand. Jewelry demand could ease if prices remain elevated, but ETF inflows remain robust, with holdings at their highest in three years.

Rate Cut Bets and Dollar Weakness Drive Precious Metals

Comments from San Francisco Fed President Mary Daly last Friday encouraged traders to overlook a stronger-than-expected core PCE reading, reinforcing bets on a 25-basis-point cut this month.

The dollar came under further pressure after a US appeals court ruled most of Trump’s tariffs illegal, sending gold to a four-month high and silver to a 14-year peak.

Fresh PCE inflation data showed a 0.2% monthly rise and 2.6% annual increase, broadly in line with expectations, keeping precious metals supported.

Shifts in Global Silver Market Dynamics

Silver is increasingly seen as a hedge asset, drawing interest from institutional investors such as pension funds and mutual funds. This trend could underpin a long-term rally similar to gold’s trajectory.

The US remains the largest silver investment market, led by pension demand. India follows closely and may soon overtake, given last year’s record imports. Germany and Australia also remain key markets, with coins and bullion as the most popular forms.

Silver’s Road Toward Record Highs

The clear breakout above $40 has sparked speculation about revisiting the historic $50/oz level. While difficult to achieve this year, analysts say it cannot be ruled out.

Two key drivers will be Fed monetary policy and US trade tariffs. If the Fed eases policy while the government tightens tariffs, the twin forces could push silver closer to record highs. Technically, the next target is the 2011 peak at $44, with $50 in view longer term.

Short-term corrections remain possible, offering buying opportunities near $40 support, which also aligns with the uptrend line. A deeper pullback could test $37 support, a level that has held repeatedly in the past.

US stock indexes edged higher at the start of Thursday’s session following the release of fresh economic data.

According to ADP data published Thursday, the private sector added 54,000 jobs in August, below expectations of 75,000, after adding 104,000 jobs in July.

Meanwhile, Labor Department figures showed that initial jobless claims rose by 8,000 to 237,000 in the week ending August 30, the highest level since late June. Analysts had expected 230,000 claims.

Following the ADP report, CME Group’s FedWatch tool showed that the probability of a Federal Reserve rate cut at the September meeting rose to 97.4%, up from 96.6% the previous day.

At 15:18 GMT, the Dow Jones Industrial Average rose 0.1% (26 points) to 45,297, the S&P 500 gained 0.1% (3 points) to 6,451, while the Nasdaq Composite added 0.1% (11 points) to 21,511.

Copper prices fell on Thursday, pressured by a stronger US dollar and profit-taking after the metal climbed to a five-month high, ahead of key US employment data and amid uncertainty surrounding tariffs.

Three-month copper on the London Metal Exchange declined by 0.6% to $9,917 per metric ton as of 09:45 GMT, after touching its strongest level since March 26 at $10,038 in the previous session.

This leaves copper with a gain of about 13% year-to-date.

Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen, said: “It seems to be simply profit-taking ahead of these economic data. Also, the $10,000 level is currently a strong barrier for copper prices, while underlying fundamentals are not strong enough to break through it.”

US private payroll data and monthly job cuts are due later on Thursday, followed by the crucial nonfarm payrolls report on Friday, which will help shape expectations for the Federal Reserve’s upcoming policy meetings.

In China, the most-traded copper contract on the Shanghai Futures Exchange slipped 0.5% to 79,770 yuan ($11,152.12) per ton.

Metals markets were also affected by a steady US dollar, which makes commodities priced in the greenback more expensive for holders of other currencies.

Market concerns were further fueled by uncertainty over demand in China, the world’s largest consumer of metals. Galaxy Futures noted that modest weakness in end-user demand could reflect a muted season in China, though widespread shutdowns of recycled copper rod plants have provided some support to prices.

China’s refined copper output is expected to post a rare monthly decline in September — the first for the period since 2016 — due to new tax regulations restricting scrap copper supply.

As for other base metals, aluminum lost 0.7% to $2,601 per ton, nickel fell 0.6% to $15,215, zinc declined 0.7% to $2,842, and tin eased 0.6% to $34,480, while lead was steady at $1,995.50.

The dollar index rose 0.2% to 98.3 by 15:02 GMT, after reaching as high as 98.4 and as low as 98.08.

On US trading, COMEX copper futures for December delivery dropped 1.2% to $4.57 per pound by 15:00 GMT.