Silver Price Prediction – Silver prices maintain upward momentum as yields and dollar rise

Key Insights

• Silver prices maintain a bullish bias amid signs of slower growth.
• Treasury yields dropped amid an uncertain economic outlook. 
• Oil prices fell after OPEC+ raised oil production.

Silver prices climbed higher for the second consecutive trading session in the wake of jobs data signaling declining economic conditions. Gold prices rose as yields dipped and the dollar softened. Gold prices increased as economic data indicated a bleak economic outlook.

The Fed cannot push the unemployment rate too high when fighting inflation because it will hurt the labor market.

Benchmark yields dropped ahead of the unemployment report and non-farm payroll data released tomorrow. The ten-year yield slid by 2.7 basis points to 2.904%. Oil prices reversed losses amid OPEC+ decision to hike oil output, as tight supply had caused oil prices to fall. 

According to the ADP Private Payroll Report, private payrolls rose by 128.000 in May. This reading marks the slowest growth during the pandemic recovery, signaling fears of slowing economic growth.

The Dow Jones estimate for private payrolls was 299,000, which was significantly higher than the actual number. Small businesses performed the worst this month, lowering payrolls by 91,000.

US jobless claims declined by 11,000 to 200,000 from the previous week. The reading indicates that the labor market remains tight as labor supply has matched labor demand.

However, demand for labor, which is job openings, may ease as the Fed continues to aggressively tighten interest rates. This data comes before tomorrow’s key readings including non-farm payrolls and the unemployment report, which is estimated to come in at 3.5%.

Technical Analysis

Silver prices rebounded, hovering above the 10-day moving average near 21.945 despite maintaining a bearish bias. Mixed economic data released today provides an unclear direction for silver. A break above the 22.5 level could indicate a greater upside.

Any bullish breakout would have to be after to jobs report tomorrow. A worse-than-expected report could indicate a bearish decline. However, with the Fed raising rates and aiming to fight inflation, solver prices are likely headed to the downside. 

The 50-day moving average remains crossed under the 200-day moving average, which is a headwind for XAG/USD and indicates downward momentum. Silver will likely head to the 20.4 level.

Support is seen near the 10-day moving average near 21/94. Resistance is seen near the 50-day moving average of 23.3. Short-term momentum turns positive as the fast stochastic had a crossover buy signal.

The medium-term momentum turns positive as the histogram prints positively with the MACD (moving average convergence divergence). The trajectory of the MACD histogram is in negative territory, which reflects a downward trend in price movement.