Silver (XAG) Daily Forecast: Prices Hold at $31.20; Eyes on NFP Data

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Published: Jun 7, 2024, 07:19 GMT+00:00

Key Points:

Silver prices (XAG/USD) hold steady around $31.18, driven by a weaker US dollar.
Geopolitical tensions in the Middle East bolster silver's safe-haven appeal, keeping prices elevated.
Traders await the Nonfarm Payrolls (NFP) report, influencing the Federal Reserve's policy decisions.

Silver (XAG) Daily Forecast: Prices Hold at $31.20; Eyes on NFP Data

Market Overview

Silver prices (XAG/USD) extended their gains, holding steady around the $31.18 level. This upward trend is due to a weaker US dollar, which has declined amid increasing speculation of a Federal Reserve interest rate cut in September. Softer US macroeconomic data reinforced this sentiment.

Additionally, geopolitical tensions in the Middle East have bolstered silver’s safe-haven appeal, keeping its price elevated.

Traders are cautious ahead of the closely watched monthly employment data from the United States. The Nonfarm Payrolls (NFP) report will significantly influence the Federal Reserve’s future policy decisions.

Impact of Sluggish US Economic Data on Safe-Haven Assets

The broad-based US dollar declined due to sluggish US macroeconomic data, strengthening the belief that the Federal Reserve will likely begin interest rate cuts later this year.

Consequently, markets are anticipating an imminent rate cut by the Federal Reserve due to signs of an economic slowdown, keeping US Treasury bond yields and the dollar depressed near multi-week lows.

The US Department of Labor reported a higher-than-expected increase of 229K in unemployment insurance claims for the week ending June 1. Combined with Wednesday’s ADP report on private-sector employment, this indicates a cooling US labor market, reinforcing expectations for a September Fed rate cut and lowering US Treasury bond yields.

The upcoming Nonfarm Payrolls (NFP) report is expected to show a job addition of 185K in May, up from 175K previously, with the unemployment rate likely remaining at 3.9%.

The weakening US dollar, driven by sluggish economic data and expectations of a Fed rate cut, has kept US Treasury bond yields low. This has likely boosted silver prices as investors seek alternative safe-haven assets.

Escalating Violence in Gaza Spurs Demand for Safe-Haven Assets

A tragic Israeli attack on a UN-operated school in central Gaza resulted in the deaths of at least 40 people, including children and women, and left dozens wounded. The Israeli military claims it targeted and killed Hamas fighters at the school.

Amid escalating violence, the US and 16 allied countries express full support for a ceasefire and the release of captives, as outlined by US President Biden. The Gaza Health Ministry reports at least 68 Palestinians killed and 235 wounded in the past 24 hours.

Spain has announced its intention to join South Africa’s case against Israel at the International Court of Justice, accusing it of genocide. Since October 7, Israel’s conflict in Gaza has claimed 36,654 lives and injured 83,309.

The escalation of violence in Gaza, highlighted by tragic incidents like the attack on a UN-operated school, has heightened global tensions. This situation has increased demand for safe-haven assets like silver as investors seek refuge from geopolitical instability.

Short-Term Forecast

Silver (XAG/USD) is expected to remain bullish as it holds steady around $31.18, driven by a weaker US dollar and geopolitical tensions. Traders are cautious ahead of key US employment data.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver – Chart

Silver (XAG/USD) is currently trading at $31.18, down 0.15% on the four-hour chart. The pivot point at $31.55 is crucial for today’s trading. Immediate resistance levels are at $32.29, $32.82, and $33.40.

On the downside, immediate support is found at $30.61, with further support levels at $30.01 and $29.42. Technical indicators show the 50-Day Exponential Moving Average (EMA) at $30.65 and the 200-Day EMA at $29.47.

These indicators suggest a bearish trend if the price remains below the pivot point of $31.55. However, a break above this level could shift momentum towards a more bullish bias.

In conclusion, maintaining below $31.55 indicates a bearish outlook, while a break above could trigger further bullish momentum.

About the Author

Arslan Aliauthor

Arslan, a webinar speaker and derivatives analyst, has an MBA in Finance and MPhil in Behavioral Finance. He guides financial analysis, trading, and cryptocurrency forecasting. Expert in trading psychology and sentiment.