Silver Price Forecast: XAG/USD rises to near $32.60 as USD corrects ahead of US NFP
- Silver price gains to near $32.60 at the expense of the US Dollar.
- The US NFP data will influence market speculation for the Fed’s monetary policy outlook.
- Easing US-China trade tensions diminishes demand for safe-haven assets.
Silver price (XAG/USD) moves higher to near $32.60 during European trading hours on Friday. The white metal gains as the US Dollar (USD) corrects ahead of the United States (US) Nonfarm Payrolls (NFP) data for April, which will be published at 12:30 GMT.
The US Dollar index (DXY), which tracks the Greenback’s value against six major currencies, retraces to near 99.90 from the two-week high of 100.37. Technically, a lower US Dollar makes the Silver price a value bet for investors.
The US NFP report is expected to show that the economy added 130K fresh workers, significantly lower than the March reading of 228K. The Unemployment Rate is seen as steady at 4.2%. Investors will pay close attention to the US NFP data as it will indicate the impact of reciprocal tariffs announced by President Donald Trump on the so-called “Liberation Day” on April 2. The labor market data will influence market expectations for the Federal Reserve’s (Fed) monetary policy outlook.
Additionally, hopes of a de-escalation in the trade war between the US and China have also supported the Silver price. The demand for Silver as an industrial input would increase if the Sino-US tariff dispute resolves. Market experts would revise their economic projections for China if it secures a trade deal with the US, which were dampened earlier. Silver has applications in various industries such as Electric Vehicles (EVs), mining, and electronics, etc.
However, easing US-China trade tensions will diminish the demand for Silver as a safe-haven asset. Historically, the appeal of safe-haven assets, such as Silver, improves amid heightening global economic tensions.
Silver technical analysis
Silver price struggles to revisit an over three-week high around $33.70. The near-term outlook of the white metal has become uncertain as it falls below the 20-day Exponential Moving Average (EMA), which trades around $32.65.
The 14-day Relative Strength Index (RSI) falls below 50.00 after failing to break above 60.00, indicating that investors are not bullish anymore.
Looking up, the March 28 high of $34.60 will act as key resistance for the metal. On the downside, the April 11 low of $30.90 will be the key support zone.
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.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
