Silver price (XAG/USD) has experienced a significant surge, reaching close to $29.00 during Thursday’s North American session. This sudden increase in the price of the white metal can be attributed to the unexpectedly weak United States (US) ADP Employment Change data for August, which has reignited concerns about the state of the labor market.
The latest private sector employment data revealed that new payrolls only reached 99K, falling short of the downwardly revised figure of 111K from the previous month’s 122K. Economists had anticipated a higher increase in fresh private payrolls, forecasting a number of 145K.
The disappointing private sector employment figures have led to speculations in the market that the Federal Reserve (Fed) may take more aggressive measures to ease monetary policy this month. The signs of a slowing labor market demand have put pressure on the US Dollar (USD) and bond yields.
As a result, the US Dollar Index (DXY) has dropped to near 101.00, while 10-year US Treasury yields have fallen to around 3.73%. The decrease in yields on interest-bearing assets has bolstered the attractiveness of non-yielding assets like Silver, as it reduces the opportunity cost of holding investments in these assets.
Looking ahead, investors are eagerly awaiting the release of the US Nonfarm Payrolls (NFP) data for August on Friday. Additionally, the US ISM Services PMI data for August is scheduled for publication at 14:00 GMT.
Silver Technical Analysis
On a daily timeframe, Silver price is trading within a Channel formation that slopes slightly downwards. The asset has made a strong recovery and is attempting to break above the 20-day Exponential Moving Average (EMA) at approximately $28.80.
The 14-day Relative Strength Index (RSI) is moving within the range of 40.00-60.00, indicating a period of consolidation in the near future.
Silver Daily Chart
Silver FAQs
Silver FAQs
What is Silver?
Silver is a precious metal that is highly traded among investors. It has historically been used as a store of value and a medium of exchange. Traders may choose to invest in Silver to diversify their portfolio, for its intrinsic value, or as a hedge during periods of high inflation.
What factors can influence Silver prices?
Silver prices can be affected by various factors such as geopolitical instability, recession fears, interest rates, US Dollar strength, investment demand, mining supply, and industrial usage. Changes in demand from major economies like the US, China, and India can also impact Silver prices.
How does Silver relate to Gold?
Silver prices often follow Gold’s movements, as both metals are considered safe-haven assets. The Gold/Silver ratio can help investors assess the relative valuation between the two metals and determine potential opportunities for investment.
What should investors know about Silver?
Investors should be aware of Silver’s unique characteristics, its relationship with other assets, and the key market drivers that can influence its price movements.