Silver (XAG) Daily Forecast: Slips Below $28 as DXY Strengthens—Further Losses Ahead?

Market Overview

Silver (XAG/USD) kicked off the week with a bullish run, trading around $27.75 and reaching an intra-day high of $28.12. This uptick was driven by broader concerns over the US economy, highlighted by underwhelming employment data, and geopolitical tensions that dampened investor appetite for risk.

The upward momentum was also supported by news of First Majestic Silver’s (NYSE) $970 million all-share acquisition of Gatos Silver. The merger aims to combine three major silver mining districts in Mexico, with a projected annual production of 30-32 million ounces of silver equivalent.

However, investor reaction has been sceptical, as First Majestic’s stock dropped 16% last week, reflecting market concerns over the deal’s execution. Despite the strategic benefits of consolidating resources, the market has shown reservations, limiting further gains in silver prices.

US Jobs Data and Fed Rate Outlook Weigh on Silver

In the US, Silver’s gains were capped by a modest recovery in the US Dollar, which found support from a mixed jobs report. The Bureau of Labor Statistics reported an increase of 142,000 Nonfarm Payrolls (NFP) in August, falling short of the 160,000 forecast. Additionally, unemployment dropped to 4.2%, while wage inflation ticked up to 3.8%.

These figures have tempered expectations for a large 50 basis point rate cut by the Federal Reserve, with CME’s FedWatch tool indicating a 70% chance of a 25 basis point reduction later this month.

Higher Treasury yields and a firmer USD have thus limited Silver’s upward movement, despite ongoing demand driven by economic and geopolitical uncertainties.

Short-Term Forecast

Silver (XAG/USD) trades near $27.80, facing key resistance at $28.13. A break above could lead to further gains, while support lies at $27.64. Bias remains bearish below $28.13.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver (XAG/USD) is trading at $27.80, up 0.46% for the day, but facing key resistance at $28.13, which is now acting as a pivotal level after previously being a support.

A break above $28.13 could open the door for a test of the next resistance levels at $28.49 and $28.99, with the 50-day EMA at $28.43 providing additional resistance.

On the downside, immediate support lies at $27.64, followed by $27.18 and $26.74. The current bias remains bearish below $28.13, and a break above this level would signal a potential shift toward a more bullish trend.