Silver Price Analysis: Bears threaten the 100-day SMA amid USD strength

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  • XAG/USD peaked at a daily high of $24.80 then settled near the $24.15 area.
  • US NFPs and PMI figures from August beat expectations. Still, wages decelerated, and Unemployment rose.
  • The USD strength drove the grey metal downwards.

At the end of the week, the XAG/USD closed with losses but managed to hold some weekly gains, closing near $24.15. On the data front, the US released soft Average Hourly Earnings, while Nonfarm Payrolls (NFPs) and ISM Manufacturing PMI figures came in higher than expected, helping the USD to get a boost. US yields sharply declined during the American sessions but then recovered, applying selling pressure on the Silver.

The US showed mixed economic data. On the bright side, the US Bureau of Labor Statistics released the Nonfarm Payrolls (NFPs) from August that came in at 187,000, higher than the expected 170,000 and the previous reading of 157,000. In addition, the Institute for Supply Management released the ISM Manufacturing PMI from the same month that came in at 47.6, while the expected figure was 47 and rose above the previous 46.4. On the other hand, wage inflation, measured by the Average Hourly Earnings, slowed to 4.3%, a bit lower than the consensus and the previous 4.4%. The Unemployment rate rose to 3.8% in the same month, higher than the market’s consensus.

Following the NPF release, the US treasury bond yields sharply declined but then recovered some ground following the release of the ISM PMIs. The 2,5, and 10-year yields settled at 4.88%, 4.30% and 4.18%, respectively, after falling to their lowest level since August 10.

That being said, the CME FedWatch Tool suggests that investors expect the Fed won’t hike in September, while the odds of a 25 basis points (bps) increase declined near 35% for November and December after rising near 46% last week. Regarding the decisions, it will all come down to the data, and investors will continue placing their bets depending on the signs the US economy gives

 XAG/USD Levels to watch 

 Upon evaluating the daily chart, a neutral to bearish outlook is seen, with the balance starting to lean in favour of the bears, although they still have hurdles to overcome.With a negative slope above its midline, the Relative Strength Index (RSI) suggests a potential weakening of buying pressure, while the Moving Average Convergence (MACD) exhibits decreasing green bars. On the other hand, the pair is above the 20,100,200-day Simple Moving Average (SMA), indicating a favourable position for the bulls in the bigger picture.

 Support levels: $24.00, $23.90 (100-day SMA), $23.50

 Resistance levels: $24.30, $24.80, $25.00

 XAG/USD Daily Chart

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