Silver Price Forecast: XAG/USD steadies below $30 ahead of US ISM Services PMI

Silver price (XAG/USD) fails to find direction and remains sideways below the psychological resistance of $30.00 despite the United States (US) Automatic Data Processing (ADP) has reported weaker-than-expected private payroll data for May.

The agency reported that private employers recruited 152K jobs, which were lower than the estimates of 173K and the prior release of 188K, downwardly revised from 192K. This exhibit normalizing labor market conditions, which fuels expectations of the Federal Reserve (Fed) reducing interest rates from the September meeting and weighs on the US Dollar. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, faces pressure while attempting to extend recovery above 104.30.

Volatility in the US Dollar is expected to remain high as investors await the US ISM Services PMI data for May, which will be published at 14:00 GMT. Economists have forecasted that the Services PMI is estimated to have returned to expansion, seen at 50.5, higher than the former release of 49.4.

Apart from that, investors will also focus on other sub-components such as New Orders and Prices Paid Indices, which reflects the demand outlook and change in input prices. In the service sector, major allocation of expenditure goes in wages paid to workers, which has remained a key driver to persistent price pressures.

Silver technical analysis

Silver price trades in a Rising Channel chart pattern, formed on a daily timeframe, in which each pullback is considered as buying opportunity by market participants. Upward-sloping 50 and 200-day Exponential Moving Averages (EMAs) around $28.50 and $25.40, respectively, indicate that the overall trend is bullish.

The 14-period Relative Strength Index (RSI) falls back into the 40.00-60.00 range, suggesting that upside momentum has faded. However, the upside bias remains intact.

Silver daily chart