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- Silver price faces resistance near $66.25 in the countdown to the US NFP data.
- The Fed is expected to raise interest rates in the policy meeting this month.
- Higher oil prices could pressurize the Silver price.
Silver price (XAG/USD) struggles to extend Wednesday’s strong recovery move above $66.25 during the European trading session on Thursday. The white metal could remain sideways as investors await the United States (US) Nonfarm Payrolls (NFP) data for August, which will be released on Friday.
US jobs rebound seen keeping Fed on hold despite hawkish risks
According to TD Securities, August Nonfarm Payrolls are expected to “rebound to 95k after July posted a decline of 23k,” with the firm cautioning that “risks to our payrolls forecasts appear hawkish, and we would not rule out an outsized positive surprise.” The unemployment rate is projected to have “gone sideways at 4.1% with balanced risks,” suggesting only limited change in headline labour market conditions.
Investors will pay close attention to the US NFP report as it is expected to influence market expectations for the Federal Reserve’s (Fed) monetary policy outlook.
Analysts at TD say that “a modestly hawkish employment report will reaffirm the Fed’s attention on inflation, but it will be by itself unlikely to push the Committee towards hikes,” as they “continue to expect that inflation data can print modestly, allowing the Fed to keep rates on hold for now.”
According to the CME FedWatch tool, traders see a two-in-three chance that the Fed will increase interest rates in the September policy meeting.
Elsewhere, higher oil prices due to restricted energy shipments through the Strait of Hormuz, a vital passage to almost one-fifth of global energy supply, could fizzle out the recovery move in the Silver price.
Higher oil prices prompt global inflation expectations, a scenario that increases fears of interest rate hikes from central banks. Such a case bodes poorly for non-yielding assets, like Silver.
Silver Technical Analysis
In the daily chart, XAG/USD trades at $66.00. The pair holds above the 20-day Exponential Moving Average (EMA) at $65.51, keeping the near-term bias constructive as price extends its recovery from the mid-$50s area.
The Relative Strength Index (14) at 53.04 sits in neutral territory but leans higher, which suggests buyers still have the upper hand without the market being overstretched.
On the downside, immediate support is seen at the 20-day EMA at $65.51, where a deeper pullback would be expected to attract fresh demand. Looking up, the August high near $71 is expected to remain a key barrier.
