Silver (XAG) Forecast: Key Fibonacci Levels in Focus as Traders Await NFP Report

Silver Pulls Back After Testing Key Resistance, Traders Eye NFP Report

Silver prices are lower on Thursday after hitting a multi-month high of $32.55 in the previous session. The pullback comes as the metal tests key resistance inside the Fibonacci retracement zone between $31.81 and $32.53, derived from the $34.87 to $28.74 trading range. While the broader uptrend remains intact, technical signals suggest a potential short-term correction.

At 13:04 GMT, XAG/USD is trading $32.03, down $0.29 or -0.88%.

Key Support Levels in Focus

Silver’s short-term range sits between $29.70 and $32.55. The first major support level to watch is $31.81, the 50% retracement of the latest rally. If sellers push prices below this level, silver could test the minor pivot at $31.12.

On the upside, resistance remains limited between Wednesday’s high of $32.55 and the October 22 main top at $34.87. This suggests that a strong bullish catalyst could quickly propel prices higher. However, for now, traders appear to be waiting for fresh signals before taking decisive action.

Gold Consolidates After Record Highs

Gold prices are also seeing some consolidation after reaching an all-time high of $2,882.31 on Wednesday. The pause in gold’s five-session winning streak reflects investor caution, with the metal currently trading within Wednesday’s range.

The Relative Strength Index (RSI) is near 76, signaling overbought conditions, which could increase the likelihood of a pullback. A drop toward the minor pivot at $2,827.26 could test market sentiment and determine whether dip-buying remains strong or if a deeper correction is ahead.

Market Focus Turns to Nonfarm Payrolls and Fed Policy

The upcoming U.S. nonfarm payrolls (NFP) report on Friday is expected to play a major role in determining near-term price action for both silver and gold. Economists are forecasting 175,000 job additions with an unchanged unemployment rate of 4.1%. A stronger-than-expected report could reinforce expectations that the Federal Reserve will keep interest rates elevated, putting pressure on precious metals. Conversely, a weak report could renew speculation of rate cuts, supporting gold and silver.

Adding to this, the ADP report on Wednesday showed private payrolls grew by 183,000 in January, exceeding forecasts and suggesting continued labor market resilience. This raises the stakes for Friday’s NFP data, as a strong number could challenge expectations of Fed rate cuts later this year.

Trade War Tensions and Fed Commentary Add Uncertainty

Although initial concerns over tariffs have eased, uncertainty remains. President Trump announced a temporary 30-day pause on new tariffs for Mexican and Canadian goods, but China has retaliated with a 15% duty on U.S. liquefied natural gas and other imports, effective February 10. Any further escalation in trade tensions could drive renewed safe-haven demand for gold and silver.

Meanwhile, traders are also closely monitoring comments from Federal Reserve officials, including Governor Christopher Waller and San Francisco Fed President Mary Daly. Any hawkish signals from the Fed could add selling pressure to precious metals, while dovish remarks may provide support.

Short-Term Outlook: Silver Faces Resistance, but Bias Remains Positive

Silver remains in an uptrend, but resistance at $32.55 is keeping gains in check. The market appears to be waiting for the next major catalyst, with Friday’s NFP report likely to determine the next move.

If silver breaks above $32.55, a move toward $34.87 becomes increasingly likely. However, if selling pressure intensifies, traders should watch $31.81 and $31.12 as key support zones. With global uncertainty still in play and gold consolidating near record highs, silver’s outlook remains bullish, but short-term volatility is expected.

More Information in our Economic Calendar.