Silver Price Forecast: XAGUSD subdued around $20.85s amidst an upbeat sentiment

The Silver price fluctuates in the North American session due to risk appetite improvement after last Friday’s US employment data showed that the economy continues to add jobs, though the Unemployment Rate jumped, signs that the Federal Reserve’s policy is beginning to impact the “tight” labor market. That, alongside uncertainty on US midterm elections and inflation data to be released, keeps the American Dollar on the defensive. At the time of writing, the XAGUSD is trading at $20.82, below its opening price by 0.11%.

An improvement in risk appetite, a headwind for Silver

Wall Street continues to trade in the green, while the US Dollar drops to fresh two-week lows, as shown by the US Dollar Index (DXY). Last week US employment report showed that the economy added more jobs than estimated, meaning that the Fed would need to do more; however, the unemployment rate edged up and is closing to 4% as the labor market flashed signs of easing, meaning that the Fed, could keep tightening, but at a slower rhythm.

Meanwhile, Fed officials began to cross wires. Boston Fed President Susan Collins said it makes sense to slowly hike rates to balance growth and inflation risks as the US central bank tries to achieve a “soft landing.” Nonetheless, it reiterated that rates might be higher than September’s projections. Later, Richmond’s Fed President Thomas Barkin said that the Federal funds rate (FFR) would likely end above 5%, while he foresaw a “potential” higher peak.

That said, XAGUSD rallied since last Friday as speculation that the Fed would lift rates gradually surfaced. Nevertheless, US Treasury bond yields recovered some ground, with the 10-year hup four bps at 4.197%, a headwind for the precious metals. In the meantime, as of Friday, the 10-year US Treasury Real yields stay at 1.72%, providing support for the greenback.

What to watch

Late in the day, further Fed speakers will cross newswires, led by Cleveland’s Fed President Loretta Mester, alongside Boston’s Fed President Susan Collins.

Silver Price Analysis (XAGUSD): Technical outlook

The XAGUSD is neutral-biased, though it should be noted that price action is getting closer to the 200-day Exponential Moving Average (EMA) at $21.49, which could shift the white metal bias to neutral-upwards. If XAGUSD reclaims the latter and clears the June 6 swing high at $22.51, that would turn Silver bullish and pave the way towards the YTD high at $26.94.

Otherwise, the XAGUSD first support would be the $20.00 figure, which, once cleared, could open the door towards the 100-day EMA at $19.46.