Silver Price Forecast: XAG/USD jumps to near $61.80 as hawkish Fed bets recede

Silver price surges to near $61.80 amid receding hawkish Fed expectations.
Traders pare hawkish Fed bets due to soft US NFP data for September.
The US Dollar remains firm due to increased French debt concerns.

Silver price (XAG/USD) is up 2.3% to near $61.80 during the European trading session on Monday. The white metal starts the week on a strong note as traders have scaled back Federal Reserve’s (Fed) interest rate expectations after soft United States (US) official labor market data for September.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

The data showed on Friday that the economy created 29K fresh jobs in September, fewer than 90K estimates and the previous reading of 133K, revised lower from 162K. The Unemployment Rate increased to 4.2%, while it was expected to remain steady at 4.1%.

According to the CME FedWatch tool, the odds of the Fed hiking interest rates in the policy meeting later this month have diminished to 19.4% from 70.9% seen a week ago.

Theoretically, the scenario of traders trimming hawkish Fed prospects improve the appeal of non-yielding assets, such as Silver.

Contrary to market reaction, analysts at Deutsche Bank see the overall labor market picture remaining steady and expect two further 25 basis points (bps) Fed hikes over the next couple of quarters.

US labour data seen as resilient, keeping Fed hike expectations in place

According to Deutsche Bank, the latest US payrolls disappointment has not fundamentally altered their assessment of the labour backdrop. They note that “our US economists think the details still point to a broadly stable labour market,” with the softer headline figure offset by strength elsewhere. In their view, “although the headline payroll number was disappointing, the wider labour-market picture remains relatively resilient, particularly alongside recent ADP and jobless-claims readings.”

Meanwhile, the US Dollar (USD) remains broadly firm as heightened French fiscal risks have improved its safe-haven demand. The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.3% higher to near 102.20. The DXY posted a fresh annual high near 102.53 during the day. Technically, a higher US Dollar makes the Silver price an unfavorble risk-reward bet for investors.

Silver Technical Analysis

In the daily chart, XAG/USD trades at $61.69, maintaining a bearish near-term bias as it holds beneath the 20-day exponential moving average (EMA) at $63.24. The metal remains pressured by this overhead dynamic resistance, while the Relative Strength Index (RSI) at 43.89 stays below the midline, hinting at subdued bullish momentum rather than an imminent recovery.

On the topside, the 20-day EMA at $63.24 is the first resistance that bulls must reclaim to ease the current downside pressure and open the way for a more sustained rebound towards the September 9 high at $68.33. Looking down, the psychological level of $30 is the immediate support zone. The Silver price could fall further to the August 3 low at $56.57 if it fails to hold $60.00.

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

Silver FAQs

Why do people invest in Silver?

Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.

Which factors influence Silver prices?

Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.

How does industrial demand affect Silver prices?

Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.

How do Silver prices react to Gold’s moves?

Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.

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