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Silver Prices Forecast: XAG/USD’s Stability Tested by Upcoming U.S. Labor Market Report

By:
James Hyerczyk

Silver (XAG/USD) prices edge towards weekly fall, influenced by stronger dollar with upcoming U.S. jobs data impacting Fed's rate decision.

Silver Prices Forecast: XAG/USD’s Stability Tested by Upcoming U.S. Labor Market Report

In this article:

Highlights

  • Silver Nears First Weekly Drop in Four Weeks
  • U.S. Labor Data Crucial for Silver’s Direction
  • Dollar’s Movement Key to Silver Price Fluctuations

Silver Prices Eye Weekly Decline Amid U.S. Economic Data

Silver (XAG/USD) prices are poised for their first weekly drop in four weeks, influenced by a strengthening dollar. However, the market remains steady as investors anticipate crucial U.S. jobs data, which could impact the Federal Reserve’s rate decision in March.

Current Market Position and Future Projections

As of 07:35 GMT, spot silver edged slightly lower to $23.82 per ounce, marking a near 2% drop for the week. Conversely, U.S. silver futures showed an uptick at $24.12. Despite this week’s decline, silver has generally been well-supported above $23.90, but upcoming payroll data could challenge this stability. Earlier in the week, silver reached a seven-month high of $26.34, propelled by expectations of a Fed rate cut, before uncertainty over the timing led to a decline.

Economic Indicators and the Federal Reserve Outlook

Recent economic data, including ADP’s employment change report and the Job Openings and Labor Turnover Survey (JOLTS), suggest a cooling U.S. labor market. These reports, coupled with lower-than-expected weekly jobless claims, are crucial ahead of the Fed’s policy meeting next week. The central bank is expected to maintain current interest rates, but the market seeks clues about future policies and economic outlook.

Influence of the Dollar and Non-Farm Payrolls

The dollar index’s potential to break a three-week losing streak could make silver more expensive for holders of other currencies. Meanwhile, the upcoming U.S. non-farm payrolls report is set to be a significant determinant of market direction, with particular interest in the unemployment rate and average earnings.

Short-Term Forecast: Market Reactions Awaited

In the short term, silver’s trend will be heavily influenced by the U.S. labor market data and the subsequent Federal Reserve’s response. With markets indicating a possible rate cut by March, the outcome of these economic reports will be pivotal in shaping the direction of silver prices in the coming weeks.

Technical Analysis

Daily Silver (XAG/USD)

The current daily price of Silver (XAG/USD) at 23.82 is slightly above both the 200-day and 50-day moving averages, which are at 23.49 and 23.09 respectively. This positioning above the key moving averages suggests a bullish sentiment in the short term.

The price is hovering just above the minor support level of 23.55, providing a narrow margin above this threshold. If the price remains above this level, it could maintain its bullish stance.

However, the proximity to the minor resistance at 24.50 will be a key area to watch. If the price breaks through this resistance, it could signal a stronger bullish momentum. Conversely, a drop below the minor support level could shift the sentiment towards bearish.

Overall, the market sentiment for Silver currently leans towards bullish, but with caution due to the vulnerability of the support level.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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