Silver (XAG/USD) encountered resistance at $61.90 on Wednesday before retreating to $61.24, but remains above the top of the last four weeks’ range at $60.90, marking its second consecutive day of gains and trading near one-month highs [1]. The rally in silver is attributed to lower US Treasury yields, which have been pressured by softer US economic data and declining oil prices, leading to reduced expectations for immediate Federal Reserve rate hikes [1].
Analysts at MUFG note that the US Dollar has experienced renewed selling since last week’s FOMC meeting, with the dollar index falling below the 100.00 level after reaching a high of 101.64 the previous week. This dollar weakness has extended following the policy decision, further supporting silver prices [1].
On Tuesday, US Factory Orders and JOLTS Job Openings both missed expectations, prompting investors to lower the probability of a quarter-point Fed rate hike in September to 58% from 67% the day before, according to CME Group's Fed Watch Tool [1]. Market participants are now focused on upcoming US labor data, including the ADP employment report and Friday’s Nonfarm Payrolls, to confirm the outlook for Fed policy [1].
Technically, XAG/USD is trading at $61.35 and is on track for a nearly 6% rally over the past two days. The price has broken above the neckline of a bullish Head and Shoulders pattern at the mid $59.00 level, indicating a constructive near-term bias. However, bulls need to surpass July’s top at $63.12 to confirm a trend shift. Momentum indicators such as the Relative Strength Index (RSI) at 68 and a positive MACD reinforce the bullish tone, though the RSI warns of potential overbought conditions and a possible bearish correction. Key resistance levels are $61.90 and $63.12, with the Head and Shoulders measured target at $65.65, while immediate support lies at $59.35 and $56.65 [1].
CONCLUSION
Silver prices are benefiting from softer US economic data and diminished expectations for near-term Fed rate hikes, trading near one-month highs and showing technical strength. However, overbought signals and upcoming US labor data could influence the next move. Investors remain attentive to further economic releases for confirmation of the current bullish trend.