Silver (XAG/USD) surged more than 4%, trading at $62.21 at the time of writing, as the US Dollar remained weak due to softer-than-expected jobs data, while business activity in the services sector continued to expand [1]. The advance in silver was capped by technical resistance at the 50-day Simple Moving Average (SMA) near $62.65 [1]. The Relative Strength Index (RSI) indicated bullish momentum, suggesting the path of least resistance is upwards, with key levels to watch including the psychological $65.00 mark, the 100-day SMA at $69.22, and the 200-day SMA at $71.06 [1]. If silver retreats below $62.00, it could move towards the August 3 swing low of $59.40 and potentially retest yearly lows of $54.77 [1].
Gold (XAU/USD) also rallied, gaining nearly 3.80% and reaching its highest level in almost seven weeks at $4,232, after clearing the 50-day SMA at $4,161 and surpassing the $4,200 mark [2]. The US Dollar Index (DXY) was down 0.12% at 99.76, contributing to the strength in precious metals [2]. The July ADP Employment Change report was weaker than expected, dropping from 98K to 44K, below the forecast of 70K, while the ISM Services PMI improved slightly from 54 to 54.1, though it missed estimates by 0.4 points [2]. The employment diffusion index fell from 51.2 to 47.4, and the prices paid index rose from 67.7 to 70.3, continuing a 110-month trend [2].
Market participants are closely watching the upcoming July Nonfarm Payrolls report, with economists expecting job creation of 80K and the unemployment rate to remain steady at around 4.2% [2]. Federal Reserve officials remain hawkish, with Minneapolis Fed President Neel Kashkari advocating gradual rate increases and Kansas City Fed President Jeffrey Schmid calling for strict monetary policy to address high inflation [2]. Despite easing inflationary pressures from lower crude prices and hopes for a de-escalation in the Gulf region, investors expect a 25-basis-point rate hike by the Fed at the September meeting, according to Prime Terminal [2].
Technical outlooks for both metals are bullish, with momentum indicators suggesting further upside potential. For silver, reclaiming $65.00 would be a key milestone, while gold's market structure has shifted to neutral after surpassing recent highs, with the RSI indicating bullish momentum [1][2].
CONCLUSION
Both silver and gold experienced significant gains driven by a weaker US Dollar and soft US jobs data, with technical indicators pointing to further upside. Market sentiment is positive, but investors remain cautious ahead of key US employment reports and potential Federal Reserve rate hikes. The precious metals market is poised for continued volatility as economic and geopolitical factors evolve.