Silver Prices Climb as Traders Eye Key U.S. Jobs Data

Daily Silver (XAG/USD)

Silver prices surged over 1.50% on Thursday, reaching a critical juncture with support at $28.22. The upward momentum is positioning silver to test the 50-day moving average of $29.13, a level that could ignite further buying interest. If silver holds above this technical threshold, a move toward the next resistance at $29.50 is likely. However, failure to sustain the $28.22 support may result in a slide back to $27.22, with the 200-day moving average at $26.64 serving as a key safety net for traders.

At 11:46 GMT, Silver (XAG/USD) is trading $28.66, up $0.40 or +1.40%.

Fed Rate Cuts Fuel Silver’s Rise

Silver’s recent rally is underpinned by mounting expectations of a more aggressive rate-cutting cycle from the U.S. Federal Reserve. Speculation that the Fed will reduce interest rates as soon as this month is pushing demand for silver higher. Ole Hansen, head of commodity strategy at Saxo Bank, noted that global economic concerns are amplifying the downside risk for growth-related commodities, simultaneously lifting the prospects for silver as a safe-haven asset.

Traders are pricing in a 57% chance of a 25-basis-point rate cut in September, with an outside possibility of a 50-basis-point cut at 43%. This dovish sentiment has sparked renewed interest in silver-backed ETFs, reversing a years-long trend where investors had favored higher-yielding U.S. Treasuries over non-yielding assets like silver.

U.S. Labor Data Looms Large

The movement in silver prices remains tightly linked to U.S. employment data. Wednesday’s JOLTS report, which revealed job openings had fallen to a 3.5-year low, signaled potential cooling in the labor market. This bolstered expectations of a more substantial rate cut, as a weaker labor market may prompt the Fed to ease policy further.

Attention now shifts to today’s ADP Employment Change report, with economists expecting the private sector to add 144,000 jobs in August. If the ADP report surpasses expectations, it may temper hopes for a larger rate cut, which could cap silver’s upside in the short term.

Treasury Yields and Dollar Reflect Market Anxiety

Treasury yields have softened in response to the weaker JOLTS data, as markets anticipate looser monetary policy. Meanwhile, the U.S. dollar has slipped 5% from its 2024 highs, pressured by expectations of lower interest rates. A stronger-than-expected ADP report or nonfarm payrolls data on Friday could provide some support for the dollar, potentially weighing on silver.

Short-Term Silver Forecast

In the short term, silver’s price action will be driven by the results of the upcoming ADP and nonfarm payrolls reports. A bullish outcome, such as lower job growth, could prompt the Fed to cut rates more aggressively, providing further support for silver. However, if the labor market shows resilience, silver may struggle to maintain its recent gains. Traders should watch the $28.22 level closely, as a failure to hold this support could signal a reversal in the current bullish trend.