Silver Prices Forecast: Potentially Bearish Trend Ahead of Key US Payrolls Data

Highlights

• Silver declines amid bearish momentum shift.
• Global events, U.S. jobs data heighten silver market volatility.
• Recent surge, followed by reversal top indicate potential correction.

Subtle Shift in Silver Market

Silver (XAU/USD) prices are experiencing a subtle decline early Tuesday, with spot silver currently trading at $24.49, a slight decrease from its recent peak. The dip is attributed to bearish trading momentum, and an attempt to extend losses from the previous day. Despite a decrease in the U.S. dollar index and Treasury yields, silver prices are not finding strong support.

Impact of Dollar and Global Events

The decline in the dollar index, by 0.1%, and a slip in 10-year Treasury note yields to 4.2587% make silver more accessible to foreign currency holders. However, this hasn’t been enough to significantly bolster silver prices. The market is also reacting to upcoming global events, including central bank decisions and the upcoming U.S. jobs data, adding to the uncertainty.

Anticipation of Economic Data

Traders and investors will be closely watching the U.S. non-farm payrolls data due Friday, which could provide further insights into the interest rate outlook. The expectation of lower rates, indicated by a shift in Fed rate cut bets, will influence the appeal of silver as a non-interest-bearing asset.

Short-term Forecast

Silver’s surge to a 7-month high on Monday, followed by a sharp drop, suggests a bearish development, potentially indicating the start of a short-term correction. This volatility reflects mixed sentiments among traders, with some viewing the recent price spike as an outlier driven by specific factors like short-covering or buy-stops.

Technical Analysis

The current daily price of silver (XAG/USD) at 24.54 is hovering just above the minor support level of 24.49. This positioning, slightly higher than the previous close, suggests a stable yet tentative market sentiment.

Notably, the price is above both the 200-day and 50-day moving averages, set at 23.45 and 23.01 respectively, indicating a bullish trend from a longer-term perspective.

However, the closeness of the current price to the minor support level warrants caution, as a break below could signal a shift towards a bearish sentiment. The focus remains on support thresholds and the moving averages for further trend indications.

Overall, the market sentiment leans towards cautious optimism, but the proximity to the support level suggests the potential for volatility in the short term. Essentially, trader reaction to 24.49 will set the tone.