Silver Prices Forecast: US Job,Inflation Data to Determine XAG/USD’s Direction

Highlights

• Silver (XAG/USD) flirts with one-month highs amidst U.S. economic hiccups.
• Upcoming inflation data might reshape sentiments around the Federal Reserve’s rate strategy.
• U.S. Treasury yields drop, flagging concerns about economic growth deceleration.

Silver’s Price Movement Amid U.S. Economic Trends

Silver prices (XAG/USD) are wavering close to one-month peaks, reflecting the recent downturn in U.S. economic metrics. The upcoming inflation figures could change the prevailing sentiment, hinting at the Federal Reserve’s possible decision on rate hikes.

Market Indicators & U.S. Data

The U.S. Treasury yields have seen a decline as recent reports signal a deceleration in the nation’s economic growth. August’s ADP data showcased a job addition of 177,000, failing to meet Dow Jones’ expectation of 200,000, and trailing significantly behind July’s amended figure of 371,000.

In addition, the Q2 GDP growth rate was revised downward to 2.1%, indicating a potential economic slowdown, though the overall pace remains strong. This makes the upcoming non-farm payroll data a central focus for Wall Street to glean insights into the economy’s potential path.

Consumer Sentiment and Inflation

The consumer confidence index, currently at 106.1, didn’t reach the Dow Jones estimate of 116, painting a picture of waning consumer enthusiasm. Rising inflation expectations for the coming year have also been highlighted. JOLTs job data also portrayed a shrinkage in job vacancies to 8.8 million in July, the lowest since March of the previous year.

Federal Reserve’s Anticipated Move

With these new figures coming to the forefront, they are likely to significantly influence the Federal Reserve’s imminent interest rate policy decision. Post its rate hike in July, the market remains in suspense about the Fed’s future moves. There’s an overarching uncertainty as to whether the cycle of rate hikes initiated in early 2022 will see further increments.

Forecast for Silver Prices

Despite the recent uptrend, XAG/USD is projected to face nearly a 1% monthly dip. Concurrently, the U.S. dollar is preparing for its initial monthly ascent in three cycles, with Treasury yields set for their fourth successive monthly surge.

As investors await detailed insights into inflation, the Personal Consumption Expenditures (PCE) and upcoming monthly non-farm payrolls stats are anticipated to give hints on possible shifts in U.S. interest rates.

Given the current economic indicators and the potential halt in Fed’s rate hikes, silver’s appeal is heightened. The recent increase in holdings by the SPDR Gold Trust further solidifies this notion, rendering a bullish forecast for silver in the foreseeable future.

Technical Analysis

The current 4-hour price of Silver (XAG/USD) at $24.58 is slightly above its previous close of $24.57, indicating minimal volatility. Compared to its 200-4H moving average of $23.86, silver exhibits a bullish position, further supported by its stand above the 50-4H moving average of $24.05. The 14-4H RSI reading of 59.06 indicates growing momentum.

The asset is trading well above its main support ($22.70 to $22.28), while bumping up against its resistance ($25.00 to $25.27) zone. In summation, given its position relative to key moving averages and RSI, the market sentiment for Silver currently leans bullish.