Silver Price Forecast: Weak US payrolls fuel breakout above 50-day SMA
- Silver climbs nearly 4% as weak US payrolls pressure the US Dollar and Treasury yields.
- XAG/USD strengthens above the 50-day SMA, while rising RSI and MACD readings point to firm bullish momentum.
- The $65 mark caps the immediate upside, with a break higher bringing the 100-day SMA near $69 into focus.
Silver (XAG/USD) jumps nearly 4% on Friday as buying accelerates following a decisive break above the 50-day Simple Moving Average (SMA) near $62. At the time of writing, the grey metal trades around $63.94 after briefly testing the $65 psychological mark.
The advance comes after disappointing US Nonfarm Payrolls (NFP) figures drag the US Dollar (USD) and Treasury yields lower. The US Dollar Index (DXY) trades around 99.50, down nearly 0.45% on the day, while the benchmark 10-year US Treasury yield falls to around 4.60%, eight basis points below its intraday high of 4.68%.
The US economy lost 23K jobs in July, even though experts had expected an increase of 80K. The job growth for June was also revised down to 20K from the previously reported 57K.
As a result, traders quickly trimmed bets on a September Fed rate hike, with the probability falling to around 42% from 67% a week ago, according to the CME FedWatch Tool. Lower interest rates reduce the opportunity cost of holding non-yielding assets such as Silver.
Technical analysis: Daily chart
In the daily chart, XAG/USD holds a bullish near-term bias as price stands above the 21-day and 50-day Simple Moving Averages (SMAs). Momentum backs the constructive tone, with the Relative Strength Index (RSI) rising into the low-60s and the Moving Average Convergence Divergence (MACD) indicator extending further into positive territory with a firm bullish spread and expanding histogram.
On the topside, initial resistance is aligned at $65, ahead of the 100-day SMA barrier at $69. A sustained break above this cluster would open the way toward the higher horizontal resistance near $75.
On the downside, immediate support is found at the 50-day SMA at $62, followed by the psychological horizontal floor at $60. Below there, the 21-day SMA at $58 and the lower horizontal level at $55 form a deeper demand zone.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Silver FAQs
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.
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.
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.
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.
