Silver Price Forecast: XAG/USD extends pullback as US NFP data loom

• Ahead of the US NFP release, Silver extends its decline towards $51.40.
• With attention focused on US NFP, the US Dollar advances strongly.
• Last week, the Fed’s Logan described the labour market as broadly balanced, though slightly tight, if anything.

With October’s United States (US) Nonfarm Payrolls (NFP) figures due at 13:30 GMT, investors are adopting a cautious stance. A recovering US Dollar is weighing on Silver (XAG/USD), which has extended its pullback from the weekly high of $53.45 to around $51.40 during Friday’s European trading.

At the time of writing, a gain of 0.36% puts the US Dollar Index (DXY) near 101.92. The index measures the Greenback against a basket of six major currencies.

In technical terms, a stronger US Dollar leaves Silver with a less favourable risk-reward profile for investors.

US NFP forecasts point to stronger hiring alongside other key labour data

Estimates put new hiring by US employers at 65K, up from September’s 29K, while the Unemployment Rate is expected to hold at 4.2%.

Annual growth in Average Hourly Earnings, a key wage indicator, is forecast to moderate to 2.9% year-on-year (YoY) from 3% in September. The monthly increase, however, is expected to reach 0.3%, compared with the previous reading of 0.1%.

US NFP is expected to have limited influence on Fed policy expectations

Recent comments from Federal Reserve (Fed) officials following the policy decision in late October suggest that upside inflation risks will keep the central bank on a monetary tightening path. The US NFP release is therefore expected to have only a limited bearing on interest rate expectations.

Citing the failure of inflation to move back towards the 2% target as “unacceptable”, Dallas Fed Bank President Lorie Logan last week called for “at least two more quarter-point rate hikes”. On employment, Logan said, “Labor market is balanced, perhaps tightening a bit.”

Silver maintains a bearish technical bias

At $51.45 on the weekly chart, XAG/USD remains below its 9-week Exponential Moving Average (EMA) of $56.85 and considerably beneath the 61.8% Fibonacci retracement at $59.35, sustaining a bearish near-term outlook. The Relative Strength Index (14), at 36.47, sits just above oversold territory. This suggests some easing in downward momentum, although sellers remain in control following the extended fall from the cycle highs.

Any recovery would first encounter resistance at the 9-week EMA around $56.85, before the 61.8% retracement at $59.35. A more substantial rebound would bring the 50% retracement near $71.24 and the 38.2% level at $83.13 into view as further barriers. Below the current price, the first significant support lies at the 78.6% Fibonacci retracement of $42.41. Beyond that stands the structural low around $20.84, representing the 100% retracement of the broader decline.

(The technical analysis of this story was written with the help of an AI tool. Know more.)