Silver Prices Forecast: Traders Reacting to Dollar’s Swings Ahead of Jobs Data

Highlights

• Silver rises with dollar’s fall and U.S. jobs data
• Fed’s potential policy change impacts silver’s outlook
• Labor market reports to shape silver market sentiment

Silver Prices Amid Economic Indicators

Silver (XAG/USD) prices saw an uptick on Wednesday, influenced by a softening dollar and the latest U.S. jobs data, fostering beliefs that the Federal Reserve’s tight monetary policy might be drawing to a close. This rise comes amid anticipations for Friday’s U.S. non-farm payrolls data, which could significantly sway silver’s value.

Dollar’s Impact and Market Outlook

The dollar index’s slight decline by 0.2% early Wednesday has made silver more affordable for investors using other currencies. Despite silver reaching a 7-month high on Monday, analysts predict near-term fluctuations due to uncertainties in U.S. monetary policy and global geopolitical risks. The silver market seems to have found a provisional base at the 24.00 level, reflecting a pause in the recent rally.

Labor Market and Fed’s Policy Stance

Recent job opening figures in the U.S., which have dropped to their lowest since March 2021, indicate a softening labor market. This data is crucial as investors anticipate the upcoming Fed meeting, where interest rate decisions will be pivotal. Though the Fed is expected to maintain current rates, speculation about future rate cuts persists, with a 66% chance of a cut by March 2024, as per CME FedWatch tool projections.

Short-term Forecast and Fed’s Blackout Period

As the Fed enters a blackout period ahead of its December meeting, market focus shifts to various upcoming economic reports. These include ADP’s private payrolls and nonfarm payrolls, which are expected to offer insights into the U.S. economy’s health and influence the Fed’s interest rate decisions.

The sentiment for silver is tentatively bullish, riding on the expectation of a dovish shift in Fed’s policy, although analysts caution that a sustainable rally might only be seen in the latter half of 2024.

Technical Analysis

The current daily price of silver (XAG/USD) at 24.27 is positioned above both the 200-day and 50-day moving averages, which are at 23.47 and 23.04 respectively. This indicates a bullish trend, as the price is higher than these key long-term indicators.

Additionally, the price is near the minor resistance level of 24.50, suggesting a potential for an upward breakout if it surpasses this point. The price is also comfortably above the main support level of 22.23 and the minor support at 23.55, reinforcing the bullish sentiment.

Overall, the market sentiment for silver appears bullish, with the price’s position relative to the moving averages and support-resistance levels indicating strength and potential for further gains.