Silver Price Forecast: XAG/USD extends gains as US Dollar falls further, NFP comes into focus
- Silver price gains further to near $65.70 amid weakness in the US Dollar.
- The US Dollar is pressured by soft US ADP Employment Change data for August.
- The rally in US Treasury Yields hits a pause after a record high at 4.82%.
Silver price (XAG/USD) extends its Wednesday recovery move on Thursday, trading 0.67% higher at around $65.70 during the European trading session. The white metal strengthens as the US Dollar (USD) declines further due to moderate job demand in the United States (US) private sector.
As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades close to Wednesday’s low near 99.45.
On Wednesday, the US ADP reported that the private sector created 38K fresh jobs in August, fewer than 47K estimates and the prior release of 46K. This has created an unfavorable backdrop for the Nonfarm Payrolls (NFP) data for August, which will be published on Friday.
Technically, a lower US Dollar makes the Silver price a favorable risk-reward bet for investors.
Meanwhile, a pause in the rally in US Treasury Yields has also offered some support to non-yielding assets, such as Silver.
10-year US Treasury Yields have corrected to near 4.77% after posting a fresh high of 4.82%, a level last seen in October 2023.
Silver Technical Analysis
In the daily chart, XAG/USD trades at $65.92. The pair holds above the 20-day Exponential Moving Average (EMA) at $65.50, which suggests a constructive near-term bias as price continues to respect trend support.
The Relative Strength Index (14) at 52.85 sits in neutral-to-positive territory, hinting that bullish momentum is present but not overstretched after the latest advance.
On the downside, immediate support emerges at the 20-day EMA at $65.50, where buyers are likely to defend the ongoing upswing if a pullback unfolds. Looking up, the August high at $71.12 is the key resistance zone.
(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.