Silver claws back post-NFP losses after briefly crashing below $65

Silver (XAG/USD) trades around $66.20 at the time of writing on Friday, down 1.18% on the day, after recovering part of its sharp post-Nonfarm Payrolls (NFP) decline. The precious metal initially tumbled to an intraday low of $64.74 as stronger-than-expected United States (US) employment data boosted the US Dollar (USD) and Treasury yields, before buyers stepped back in as the initial market reaction faded.

The US economy added 162K jobs in August, comfortably exceeding market expectations of 56K. July's figure was revised to a gain of 21K from the previously reported decline of 23K, while June payroll growth was revised higher to 31K from 20K. The Unemployment Rate remained unchanged at 4.1%, in line with expectations.

The stronger labor-market figures initially triggered a sharp repricing across financial markets. The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, jumped as high as 99.36 following the release, while the benchmark 10-year US Treasury yield retested the 4.81% area.

These moves weighed heavily on Silver, as a stronger US Dollar makes the USD-denominated precious metal more expensive for overseas buyers, while higher Treasury yields increase the opportunity cost of holding non-yielding assets.

However, both the US Dollar and Treasury yields subsequently lose some momentum. The DXY retreats toward 99.10, while the 10-year Treasury yield eases toward 4.77%, helping XAG/USD rebound by more than $1 from its intraday low.

The employment report also shifts expectations surrounding the Federal Reserve's (Fed) September monetary policy decision. According to the CME FedWatch Tool, markets now assign around a 60% chance to a 25-basis-point interest rate hike at the September 15-16 meeting, compared with roughly 50% before the NFP release.

The stronger jobs data put additional emphasis on next week's US inflation figures. The Consumer Price Index (CPI) and Producer Price Index (PPI) could prove decisive for the Fed after Governor Christopher Waller said on Thursday that the September decision hinges on August inflation.

Waller noted that he is "finally seeing some signs of disinflation" and that the current interest-rate setting could bring inflation back toward the Fed's 2% target. However, he also warned that hotter-than-expected August inflation data could lead him to consider an interest rate hike.

Silver therefore remains caught between renewed expectations of tighter US monetary policy and the fading initial reaction in the US Dollar and Treasury yields. While the strong NFP report keeps pressure on the white metal on Friday, the retreat from the post-release peaks in both the Greenback and yields allows XAG/USD to recover a significant portion of its initial losses.

XAG/USD technical analysis

In the one-hour chart, XAG/USD trades at $66.35. The near-term tone remains capped, as price holds below the 200-hour Simple Moving Average (SMA) at $67.10 while only marginally above the 100-hour SMA at $65.73, suggesting a fragile consolidation under broader overhead supply. The Relative Strength Index (RSI) at 49.22 sits near neutral, hinting that momentum has cooled after the latest pullback and leaving the metal vulnerable to renewed downside if sellers return.

On the topside, immediate resistance emerges at the 200-hour SMA near $67.10, with the next barrier at the horizontal level around $67.50, where fresh selling could be expected on an initial test. On the downside, initial support is provided by the 100-hour SMA at $65.73, ahead of a more notable floor at $64.74 and then $63.32, where a break would reinforce the bearish bias and open the door to a deeper correction.

(The technical analysis of this story was written with the help of an AI tool. Know more.)