Silver prices retreated on Thursday as recent economic data dampened hopes for aggressive U.S. rate cuts in November. Investors are now turning their attention to upcoming payrolls data for further market direction.

Despite the current weakness, silver remains within reach of its 12-year high of $32.72 achieved last week. A sustained move above this level could pave the way for a test of $34.35. On the downside, minor support lies at $31.21, with a potential drop to $30.21 if this level is breached.

Wednesday's U.S. private payrolls report showed a stronger-than-expected increase in September, suggesting resilience in the labor market. This data has influenced rate cut expectations, with the CME FedWatch Tool now indicating a 34% probability of a 50 basis point cut in November, down from 49% last week.

Richmond Federal Reserve President Thomas Barkin cautioned that the battle against inflation might take longer than anticipated, potentially limiting the scope for rate cuts. This stance, combined with the robust economic data, has tempered expectations for aggressive monetary easing.

Recent escalations in the Middle East, including Iran's missile attack on Israel and Israel's subsequent bombing of Beirut, have provided some safe-haven support for silver. However, the impact has been limited by the shifting rate cut expectations.

The focus now shifts to Friday's U.S. non-farm payrolls report. A weak data print or an uptick in unemployment could push silver towards the upper end of its range, potentially reaching $35. The extent of any move will depend on the data's weakness and its impact on rate cut expectations.

The current market environment presents a mixed outlook for silver. While geopolitical tensions and potential economic weakness provide some support, the prospect of delayed rate cuts is weighing on prices. Traders should closely monitor Friday's jobs report for short-term direction.