- Silver price snaps five-day downtrend, reverses from the lowest levels since July 2020.
- Sluggish markets ahead of US NFP, DXY retreat underpins XAG/USD corrective bounce.
- Bears stay hopeful amid fears of recession, hawkish Fed bets.
Silver price (XAG/USD) consolidate weekly loss at the lowest levels since July 2020, picking up bids to refresh intraday high around $17.95 during early Friday morning in Europe. In doing so, the bright metal snaps a five-day downtrend as the traders prepare for the monthly US employment data.
The short-covering moves could also be linked to the stimulus hopes from China, as well as a pullback of the US Dollar Index (DXY) from the highest levels in two decades.
Chinese authorities show readiness to adopt various monetary policy tools, other than the rate cuts, to renew market optimism amid the covid woes. The policymakers also appear okay with giving special attention to the aiming real-estate sector.
On the other hand, the DXY drops 0.20% intraday to 109.45 by the press time, reversing from the highest levels since 2002.
Even so, fears surrounding the global economic slowdown, led by China’s covid woes and geopolitical tussles surrounding Europe, seem to weigh on the XAG/USD price. Also exerting downside pressure are the hawkish Fedspeak and firmer US data that underpin the market’s hopes of the Fed’s aggression towards raising rates despite recession fears.
On Thursday, US ISM Manufacturing PMI reprinted the 52.8 figure for August versus the market expectations of 52.0. Further, the final reading of S&P Manufacturing PMI for August rose past 51.3 initial estimates to 51.5, versus 52.2 prior final for July. On the same line, US Initial Jobless Claims dropped to 232K versus 248K forecast and 237K prior. Further, the Unit Labor Cost rose 10.2% QoQ during the second quarter (Q2) versus 10.7% expected while Labor Productivity dropped by 4.1% during Q2 versus the anticipated fall of 4.5% and -4.6% prior.
Following the data, Atlanta Fed President Raphael Bostic said that the Fed has work to do with inflation, a 'long way' from 2%. Before that, the newly appointed Dallas Fed President Lory Logan joined the lines of hawkish fellow US central bankers while saying, “Restoring price stability is No. 1 priority.”
Amid these plays, the US 10-year Treasury yields seesaw around the highest levels since late June, near 3.26% by the press time, while the two-year US bond coupons follow the trend by teasing the 15-year high near 3.51%. With this, the yield curve inversion hints at the recession fears and the traders’ rush towards bonds. That said, the CME’s FedWatch Tool signals 74% chance of the Fed’s 75 basis points of a rate hike in September versus nearly 69% previously.
It should, however, be noted that the downbeat expectations from the US employment numbers seem to keep silver traders on the edge as any positive surprise could quickly renew the US dollar run-up and weigh on the XAG/USD. That said, the US Nonfarm Payrolls (NFP) bears the expectations of easing to 300K versus 528K prior while the Unemployment Rate is likely to remain unchanged at 3.5%.
Technical analysis
Silver’s recovery remains elusive until the quote stays below July’s low of $18.15. That said, June 2020 low near $16.95 appears to lure the XAG/USD bears.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD: Formidable resistance sits above 0.6500
AUD/USD reversed part of Tuesday’s pronounced recovery, coming under renewed downside pressure on the back of the late rebound in the US Dollar. The move higher in the Greenback was propped up by prospects of further progress on the trad front, while speculation kept pointing to a later-than-expected Fed rate cuts.
EUR/USD: Another drop to 1.1060 is not ruled out
EUR/USD rapidly faded its initial move to weekly highs around the 1.1270 zone on Wednesday, refocusing on the downside and approaching the 1.1160 region toward the closing bell on Wall Street. The pair’s pullback came on the back of the firm tone in the Greenback, which managed to regain balance and reverse initial losses, all ahead of Thursday’s release of US Retail Sales and the speech by the Fed’s Powell.
Gold looks consolidative below 3,200
Gold appears to have entered a brief consolidation phase below the $3,200 mark per troy ounce on Wednesday, following an earlier drop to five-week lows. The retreat came as investors continued to rotate out of the safe-haven asset, with growing optimism over trade developments driving steady selling in the metal.
$100M DeFi Development funding sends Solana price above 73-day resistance
Solana price surged past $184 on Wednesday, marking a 25% gain in May. The rally follows a fresh capital injection by DeFi Development, reaffirming institutional confidence in Solana’s blockchain ecosystem amid favorable macroeconomic signals.
US-China trade truce only emphasizes timeless investing truths
Markets roared back to life as the US and China hit pause on their escalating trade war, with both sides emphasizing mutual respect and dignity. But it wasn’t the fine print that moved markets—it was the mood shift. Investors rushed back into risk assets, betting that the worst might be behind us.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.