- Silver price jumps sharply to near $29.00 as the Fed is expected to deliver a bigger interest rate cut this month.
- Weak private sector employment data weighs on the US Dollar and bond yields.
- Investors await the US NFP data for August, which will be published on Friday.
Silver price (XAG/USD) delivers a vertical upside move to near $29.00 in Thursday’s North American session. The white metal witnesses a strong buying interest as surprisingly weak United States (US) ADP Employment Change data for August renewed fears of deteriorating labor market conditions.
The private employment data that came in the early American session showed that fresh payrolls were lower at 99K than the downwardly revised figure of 111K from 122K in July. Economists estimated fresh private payrolls to have increased to 145K.
Weak private sector employment data has prompted market speculation that the Federal Reserve (Fed) will start the policy-easing cycle this month aggressively. Signs of slowing labor market demand have weighed heavily on the US Dollar (USD) and bond yields.
The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, declines to near 101.00. 10-year US Treasury yields plunge to near 3.73%. Lower yields on interest-bearing assets strengthen the appeal of non-yielding assets, such as Silver, given that they reduce the opportunity cost of holding investment in them.
Going forward, the US Nonfarm Payrolls (NFP) data for August will be keenly watched, which will be published on Friday. Meanwhile, investors await the US ISM Services PMI data for August, which will be published at 14:00 GMT.
Silver technical analysis
Silver price trades in a Channel formation on a daily timeframe, which is slightly sloping downwards. The asset recovers sharply and attempts to break above the 20-day Exponential Moving Average (EMA), which trades around $28.80.
The 14-day Relative Strength Index (RSI) oscillates inside the 40.00-60.00 range, suggesting a consolidation ahead.
Silver daily chart
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
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
EUR/USD stays below 1.1150 after upbeat US data
EUR/USD pulls away from the daily high it set near 1.1200 and trades below 1.1150 on Thursday. Although the upbeat data from the US helps the USD limit its losses, improving risk mood supports the pair in the American session.
GBP/USD clings to gains near 1.3250 after BoE maintains bank rate at 5%
GBP/USD struggles to preserve its bullish momentum but stays in positive territory near 1.3250. The Bank of England (BoE) left the policy rate unchanged at 5%, with only one policymaker voting in favor of a 25 bps cut. In the US, weekly Jobless Claims declined to 219K.
Gold trades within a touching distance all-time high set at $2,600
Gold (XAU/USD) edges higher and trades back in the $2,580s on Thursday after falling to the $2,540s following the US Federal Reserve (Fed) decision on interest rates the prior day. The 10-year US T-bond yield stays above 3.7%, limiting XAU/USD's upside.
Solana announces details of Seeker, second mobile device after Saga phone
Solana Lab’s second phone, Seeker, is set to launch in 2025. At Token2049, a global conference for crypto, Solana’s General Manager Emmett Hollyer said that the new mobile would be a “rewards magnet” for its users.
BoE expected to keep interest rate unchanged at 5% as price pressures persist
After a close call in August, the Bank of England’s September interest rate decision is keenly awaited for fresh cues on the bank’s future policy action and the pace of its bond sales.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.