Silver (XAG) Daily Forecast: Eyes on $26.82 Pivot as NFP Report Looms

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Published: May 3, 2024, 07:45 GMT+00:00

Key Points:

Silver (XAG/USD) trades at $26.61, navigating a decline despite a weakening US dollar and Fed's dovish stance.
Market's risk-on sentiment reduces demand for silver, diverting investment towards higher-risk assets.
Upcoming US NFP report crucial for silver, may influence Federal Reserve's future rate decisions and silver pricing strategies.

Market Overview

Despite a less hawkish Federal Reserve and a weakening US dollar, Silver (XAG/USD) continues its decline, trading around $26.68 with an intra-day low of $26.5905.

The prevailing risk-on sentiment in the markets is dampening demand for traditional safe-haven assets like silver. This bullish market mood often diverts investment from precious metals to higher-risk assets.

The dollar’s decline to a three-week low, influenced by the Fed’s tempered policy outlook, has somewhat cushioned silver from steeper declines. As the market anticipates the upcoming US Nonfarm Payrolls (NFP) report, traders remain cautious, holding off on significant moves.

They are looking for insights from the NFP data, which could indicate the Federal Reserve’s future rate decisions, to guide their next positions in the silver market.

How Upcoming NFP Report Could Influence Silver and Gold Prices

Despite ongoing inflation concerns, Federal Reserve Chair Jerome Powell has indicated that there will be no further interest rate hikes, which has led to a decline in the US Dollar’s value. While the Fed has no immediate plans to reduce rates, it remains open to the possibility, suggesting a future easing of monetary policy.

This, coupled with a generally positive market sentiment, has reduced demand for safe-haven assets like silver. Consequently, silver prices have remained relatively stable, buoyed by a weaker dollar, indicating that significant price drops may not be imminent.

Traders are now poised to react to the upcoming release of the US Nonfarm Payrolls (NFP) report, which is closely monitored for insights into the labor market.

The report is expected to show the economy added 243,000 jobs in April, with the unemployment rate projected to stay at 3.8% and average hourly earnings possibly decreasing slightly to an annual rate of 4.0% from 4.1%.

This data is crucial as it could shape market expectations regarding the Federal Reserve’s future policy moves, significantly affecting both the US Dollar and precious metals like gold and silver.

Key Economic Indicators:

- NFP Job Addition: Expected increase of 243,000 jobs in April.
- Unemployment Rate: Anticipated to remain at 3.8%.
- Average Hourly Earnings: Potential decrease to an annual growth rate of 4.0%.

Silver (XAG/USD) Price Forecast

Silver Price Chart

Today’s trading session sees Silver slightly up by 0.14%, with a current price of $26.68. The metal is testing key technical levels, with a pivot point established at $26.82. Resistance points loom at $27.40, $27.95, and further up at $28.67. On the downside, support begins at $26.05, with subsequent levels at $25.57 and $25.06.

Technical indicators highlight a consolidation phase; the 50-day Exponential Moving Average (EMA) is positioned at $26.73, while the 200-day EMA stands at $27.12, indicating potential resistance. The formation of a double top pattern around the $26.82 mark suggests that this level is crucial.

A bullish breakout above this resistance could propel prices toward $27.40 or higher. Conversely, if silver remains below $26.82, we might see a continuation of the selling trend. The immediate outlook for silver is bearish below $26.82, but crossing this threshold could introduce a bullish momentum.

About the Author

Arslan Aliauthor

Arslan, a webinar speaker and derivatives analyst, has an MBA in Finance and MPhil in Behavioral Finance. He guides financial analysis, trading, and cryptocurrency forecasting. Expert in trading psychology and sentiment.