Silver price (XAGUSD) increased marginally to almost $28.00 per one troy ounce. Non-yielding resources like silver gain traction as the probability of a 25 basis-point rate reduction from the Federal Reserve (Fed) at the September meeting rises due to weak employment data.
Nonfarm Payroll Outlook
According to the US Bureau of Labor Statistics (BLS), nonfarm payrolls (NFP) introduced 142,000 employment opportunities in August. This was an increase over the downwardly modified graph of 89,000 in July but still below the projected increase of 160,000. As anticipated, the unemployment rate decreased from 4.3% to 4.2% in the preceding month.
Since owning non-yield-bearing currency assets has less opportunity cost, lower interest rates usually profit silver. Based on the CME FedWatch Tool, markets fully expect the Federal Reserve to cut interest rates by a minimum of 25 basis points (bps) at its next meeting in September.
Fed Official's Comment On the US Economy
Furthermore, as reported by CNBC, Chicago Fed President Austan Goolsbee stated on Friday that Fed officials are beginning to share the wider economy's view that the US central bank will soon modify policy rates.
With the current alleviation of conflicts in the Middle East, safe-haven flows could restrict Silver's possible profits. Reuters reports that Israeli forces have left Jenin, referring to the Palestine news organization WAFA.
US Dollar Index (USDX) Outlook
The US Dollar Index (USDX) showed decent buying pressure from the 100.00 psychological line, leaving an optimistic outlook for bulls.
As per the latest data, the Nonfarm Payroll failed to ensure a 50 bps rate cut, pushing investors to look for confirmation from the inflation data.
Traders might find a reliable path in the USDX from the Consumer Price Index (CPI). The headline number could come with a 0.2% increase on a monthly basis, which could be unchanged from the previous month.
Silver Price Prediction Technical Analysis
In the daily chart of silver prices, the current price trades sideways, where the broader market trend remains bullish. In the latest time frame, the buying pressure is seen from the bottom, which came without violating the 200 day Simple Moving Average. As the current silver price still hovers above the major support, we may expect the buying pressure to come soon.
In the major structure, the 50 day Exponential Moving Average is still above the current price of silver, working as a minor resistance. In that case, investors should monitor how the price overcomes this level. A valid bullish break with a daily candle above the 30.20 static resistance level could be a long opportunity, aiming for the 32.54 level.
The alternative approach is to find a failure to break higher from the 50 day EMA, which might extend the downside pressure towards the 26.04 support level.
