Silver Price Forecast: XAG Tone Determined by Non-Farm Payrolls Numbers

Highlights

• US Non-Farm Payrolls report affects silver prices.
• Bullish report may deflate silver; bearish may stimulate it.
• Results to influence Federal Reserve’s inflation battle.

Overview

Silver (XAG) currently finds itself in a precarious situation as the world anticipates the US Non-Farm Payrolls report. With the results looming, silver prices have remained relatively stagnant, teetering on the edge of their worst week in six months. This week’s robust economic data, which pushed Treasury yields to nine-month highs, has added pressure to the silver market.

Traders Brace for US Non-Farm Payrolls

The imminent release of the US Non-Farm Payrolls report at 12:30 GMT is creating tension in the silver market. Should the report turn out to be bullish, it may put downward pressure on silver prices, due to potential hikes in treasury yields and a boost in labor market confidence. Conversely, a bearish report might stimulate an increase in silver prices as concerns over the economic health arise. Investors are waiting with bated breath for these figures, eager to plan their next moves in the silver market.

Yields, Silver Impacted by Fitch Downgrade

Significant changes in yields on the 10-year and 2-year Treasury notes have been noted this week, largely driven by new economic data and the consequences of Fitch’s US downgrade. The US long-term foreign currency issuer default rating was downgraded from AAA to AA+. This decision was motivated by concerns over “fiscal deterioration,” questionable governance standards, and rising general debt.

NFP Report to Influence Fed Rate Decision

Market sentiment, now pivoting on these events, is highly contingent on the forthcoming Non-Farm Payrolls data for July. This report could shed light on the state of the labor market and the broader economy, influencing the Federal Reserve’s subsequent actions.

Bullish NFP Data to Weigh on Silver

In the event of a bullish Non-Farm Payrolls report, silver prices could take a hit. With a renewed confidence in the health of the economy, the Federal Reserve may implement more aggressive interest rate hikes. This, in turn, could further push up Treasury yields and push down silver, which is often viewed as a safe-haven asset.

Bearish NFP Report Could Bolsterr Prices

On the other hand, a bearish Non-Farm Payrolls report could stimulate an uptick in silver prices. If the report indicates a faltering labor market or signs of an economic downturn, silver may see a surge in demand. Investors would likely view it as a safer investment route amidst the prevailing uncertainty.

Short-Term Outlook:  Data Dependent

As the financial world waits in suspense, all eyes are trained on the imminent jobs data. The results will not only determine the trajectory of silver prices but also influence the Federal Reserve’s approach in its ongoing fight against inflation.

Technical Analysis

The Silver (XAG) market’s short-term sentiment appears bearish, with the current 4-hour price at 23.47, slightly below the 200-4H (23.71) and 50-4H (23.72) moving averages. The 14-4H RSI at 30.76 suggests an oversold market, possibly indicating an upcoming price rebound. The 4-hour price is above the main support area (22.28 – 22.70), yet below the main resistance area (25.00 – 25.27), further signaling bearish sentiment. However, the oversold RSI might imply potential for an upward price correction.