Silver (XAG) Forecast: Silver Bounces as Yields Ease, But Can it Reclaim $66.87?

Silver Dropped to $63.31 and Buyers Showed Up When Yields Backed Off

Silver spent the morning getting hammered. Yields climbed. The dollar tagged a two-week high. Fresh U.S.-Iran strikes pushed oil higher. The metal fell to $63.31 before the tape flipped. Yields backed off their highs. The dollar lost a step. Silver buyers stepped in and pushed the metal back to $65.07 by 18:00 GMT.

Yields and the Dollar Did All the Work in Both Directions

The 10-year Treasury yield reached around 4.81% Wednesday morning, its strongest level in years. The dollar index tagged 99.86, a two-week high. Silver went straight to $63.31 on that combination. The metal had already been falling for four sessions. Wednesday morning’s yield spike and dollar strength accelerated what was already in motion.

The turn came when the 10-year eased a few basis points off its high later in the session. The dollar index slipped from 99.86. Silver moved from $63.31 to $65.07 on that pullback alone. The yield move was small. A few basis points. But the metal was stretched enough after four days of selling that a pause in the rate trade was all it needed to bounce.

Gold was also recovering and silver followed. The broader metals complex turned together once yields stopped making new highs. The bounce was real. The reason behind it was narrow. Yields paused. They did not reverse.

Oil Stayed High and Capped the Recovery

Brent sat near $94 to $96 Wednesday after the second wave of U.S. attacks on Iran and Iranian strikes against American bases. The Strait of Hormuz is still tight. Crude stayed elevated all session.

Silver traders already know what crude above $94 Brent does to the inflation outlook. The market still prices roughly a 64% chance of a September 16 rate increase. Oil above $94 is not giving Warsh a reason to ease off. The metal bounced Wednesday not because the inflation picture changed but because yields stopped climbing for a few hours. Crude kept the lid on how far the recovery could go. Silver got from the morning low to $65.07 and stalled.

ADP Missed and Desks Used It to Flatten Into Friday

ADP came in at 38,000. The street wanted 47,000 to 48,000. That was the weakest private payroll number since January.

Manufacturing and professional services both cut jobs. The number landed while yields were already off their peaks. September hike odds held near 64%. Silver was already at $63.31. The ADP number gave buyers one less reason to stay out.

Daily Spot Silver (XAGUSD) Technical Analysis

Spot silver is edging higher late Wednesday after a steep four-day sell-off. The main trend is up, but the minor trend is down. This type of move represents a shift in momentum to the downside. The momentum shift could also be attributed to the confirmation of last Friday’s outside move, closing price reversal top.

The short-term range is $62.56 to $71.18. Earlier in the week, silver took out its 50% level at $66.87. This helped fuel the acceleration into today’s low at $63.31. In the process, $66.87 has turned into a resistance level.

Buyers need to reclaim that pivot to shift momentum back to the upside. A break through $62.56 would change the main trend to down.

The new long-term range is $54.78 to $71.18. The first key support is its 50% level at $62.98. This is followed by the main swing bottom at $62.56, the 50-day moving average at $61.55 and 50% of the all-time high at $60.83.

A follow-through to the downside could get tricky because a trade through $62.56 will change the main trend to down, but a subsequent test of the 50-day moving average and 50% of the all-time high could attract value buyers.

On the upside, the pivot at $66.87 is potential resistance, but also a potential trigger point for an acceleration to the upside. This move would also shift momentum to the upside.

What to Watch

Friday’s payrolls report runs the silver trade from here. The ADP miss at 38,000 says hiring is softening. Crude above $94 Brent says the inflation trade is still alive. The 10-year reached 4.81% Wednesday and only backed off a few basis points. Silver bounced when yields paused. That is the only bid the metal has right now. Friday’s number either keeps yields elevated or forces a repricing of the 64% September odds. The bounce holds only if the data cooperates.

Wednesday’s rebound is counter-trend while silver stays below $66.87. The pivot flipped to resistance when sellers took it out earlier this week. Reclaiming it shifts momentum back to buyers. Below, the 50% level at $62.98 and the main bottom at $62.56 are the levels that matter. A break through $62.56 changes the main trend to down but the 50-day average at $61.55 and the 50% retracement of the all-time high at $60.83 sit right below it. That cluster could catch the metal if sellers press through. The bounce from $63.31 is real. It is sitting on the yield trade and the yield trade is sitting on Friday’s number.

More Information in our Economic Calendar.