Silver Price Analysis: Bulls step up following negative data from the US
|- XAG/USD dropped to a daily low of around $23.37, but the bulls managed to push the price back to $23.60.
- The USD retreated following weak Services and Labour market data.
- Still, US Treasury yields will limit the metal’s advance.
The XAG/USD silver’s spot price traded soft on Thursday but cleared daily losses. The USD reversed following soft Services PMI, allowing the metal to gain ground but rising US yields may limit the Greenback’s losses.
Investors digest Services sector data from the US. Eyes on NFPs
In July, the US Services sector showed weakness, with the S&P index and the Institute Supply Management (ISM) figures coming in lower than expected. In addition, Labour market data also displayed mixed signals along the week, with ADP figures coming above expectations on Wednesday and Jobless Claims accelerating in the last week of July. That being said, Friday Nonfarm Payrolls (NFPs) will provide investors a clearer outlook on the sector's performance, wage inflation, and unemployment figures, which will model the expectations regarding the next Federal Reserve (Fed) decisions.
US Treasury yields, often considered the opportunity cost of holding metals, retreated but hold to a daily increase. The 2-year yield stands at 4.88% while the 5 and 10-year rates are at 4.29% and 4.18%, with both tallying significant advances of 1.37% and 2.62%, respectively, which seem to cushion the USD’s losses. Regarding the following Fed decisions, the odds of a hike in September remain low, while the probability of an increase in November stands around 30%, according to the CME FedWatch tool.
XAG/USD Levels to watch
Analysing the daily chart, the XAG/USD technical outlook is bearish in the short term. The Relative Strength Index (RSI) is comfortably positioned below its midline in negative territory, further supported by a bearish signal from the Moving Average Convergence Divergence (MACD), displaying red bars, underscoring the growing bearish momentum. Moreover, the metal’s price is below the 20 and 100-day Simple Moving Averages (SMAs), but above the 200-day SMA, suggesting that the downside may be limited.
Support levels: $23.30,$23.15 (200-day SMA), $23.00.
Resistance levels. $24.00 (100-day SMA), $24.27 (20-day SMA), $24.50.
XAG/USD Daily chart
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