Silver Prices Forecast: Upcoming U.S. Payroll Report to Steer XAG/USD Trends

Investor Sentiment and Silver Prices

Silver prices are set for a second consecutive weekly decline, currently maintaining a position above the week’s low at $26.02 but expected to close over 1% lower. This downturn follows significant recent gains, with a retreat from the multi-year high of $29.80 reached on April 12.

At 12:20 GMT, XAG/USD is trading $26.44, down $0.24 or -0.89%.

Geopolitical Developments and Market Impact

The notable easing in geopolitical tensions and a recalibration of interest rate expectations have pressured silver prices, now more than $3.78 off the April peak. Peace efforts led by Egypt, aimed at Israel and Hamas, have sparked optimism for stability, reducing the demand for silver as a safe-haven asset. Additionally, recent communications from the Federal Reserve reflect a cautious stance on adjusting rates, influenced by higher-than-anticipated inflation data.

Economic Indicators and Silver’s Outlook

Attention is now turning to the forthcoming U.S. non-farm payrolls report, expected to reveal a slowdown in job creation with 240,000 new jobs in April, a reduction from 303,000 in March. Alongside a steady unemployment rate of 3.8% and an anticipated 4% annual increase in average hourly wages, this data will offer deeper insights into the economic backdrop, potentially guiding the Fed’s next moves on monetary policy.

Short-Term Market Forecast

With silver currently testing the 50-day moving average at $25.77, the market sentiment leans bearish in the near term. The pending labor market report could pivot this outlook, especially if it indicates continued economic strength, possibly stalling any anticipated rate cuts by the Fed. Traders are advised to prepare for potential volatility following this economic update, adjusting their strategies to manage the expected volatility in silver prices.

Technical Analysis

The current sell-off in silver has changed the short-term trend to down. The momentum created by the move has put XAG/USD in a position to test the 50-day moving average at $25.78. This indicator is controlling the intermediate trend.

The intermediate trend is up. A trade through the 50-day MA will put the market in a weak position. A sustained move under this level will put the 200-day moving average at $23.84 on the radar.

The short-term trend will change to up on a trade through $27.73. This will also shift momentum to the upside.