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Silver Price Analysis: Bears Are Threatening the 100-Day SMA as the USD Gets Stronger

Leon Kramer

ByLeon Kramer

Sep 5, 2023

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  • The XAG/USD currency pair experienced a notable surge, reaching its highest point of the day at $24.80 before stabilizing near the $24.15 range.
  • In August, the United States’ nonfarm payrolls (NFPs) and purchasing managers’ index (PMI) data surpassed initial projections. However, there was a deceleration in wages and a simultaneous increase in unemployment.
  • The robustness of the USD influenced the depreciation of the grey metal.

After the week, the XAG/USD experienced a decline in value, albeit retaining certain weekly gains, ultimately concluding near the price point of $24.15. In terms of data, the United States reported modest Average Hourly Earnings. In contrast, Nonfarm Payrolls (NFPs) and ISM Manufacturing PMI data exceeded initial projections, consequently bolstering the value of the USD. The yields in the United States experienced a notable decline during the American sessions, subsequently rebounding and exerting selling pressure on the Silver market.

Mixed economic data was observed in the United States. The US Bureau of Labor Statistics has recently published August’s Nonfarm Payrolls (NFPs) data. The figures indicate a total of 187,000, surpassing the projected value of 170,000 and the previous reading of 157,000.

Furthermore, it is noteworthy that the Institute for Supply Management recently disclosed the ISM Manufacturing Purchasing Managers’ Index (PMI) for the corresponding month, which registered a value of 47.6. This figure surpasses the anticipated value of 47 and exhibits an increase from the previous reading of 46.4. In contrast, wage inflation, as determined by the Average Hourly Earnings metric, decreased to 4.3%, slightly below both the consensus estimate and the preceding figure of 4.4%.

The unemployment rate experienced an increase to 3.8% during the corresponding month, surpassing the market’s consensus.

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After the Nonfarm Payrolls (NFP) report issuance, there was a notable contraction in the yields of US treasury bonds. However, there was a subsequent partial recovery in response to disseminating the Institute for Supply Management (ISM) Purchasing Managers’ Index (PMI) data.

The yields for the 2-year, 5-year, and 10-year bonds concluded at 4.88%, 4.30%, and 4.18%, correspondingly, after a decline that brought them to their lowest point since August 10.

In light of the information above, it is worth noting that according to the CME FedWatch Tool, market participants currently anticipate that the Federal Reserve will refrain from implementing an interest rate hike in September. Furthermore, the probability of a 25 basis points (bps) increase in rates has decreased to approximately 35% for November and December, following a previous addition of around 46% last week.

About the decision-making process, it is imperative to emphasize that the outcomes will be contingent upon the analysis and interpretation of pertinent data. Consequently, investors will persist in making informed judgments based on the indicators emanating from the United States economy.

XAG/USD Levels to Keep an Eye On

Upon conducting a comprehensive analysis of the daily chart, it is evident that a neutral to bearish perspective emerges. The prevailing sentiment indicates a gradual shift towards bearish tendencies, albeit with certain obstacles that the bears must surmount to solidify their position.

The Relative Strength Index (RSI) shows a potential decline in buying pressure, as evidenced by a negative slope above its midline. The Moving Average Convergence (MACD) also displays a pattern of decreasing green bars. However, it should be noted that the pair currently resides above the 20,100,200-day Simple Moving Average (SMA), thereby suggesting a favorable stance for the bullish sentiment within the broader context.

The support levels for the given asset are as follows: $24.00, $23.90 (based on the 100-day Simple Moving Average), and $23.50.

The identified resistance levels are $24.30, $24.80, and $25.00.

Chart Daily For XAG/USD

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Leon Kramer

Leon Kramer

Leon Kramer, a renowned financial author, enlightens Main Forex News readers with his deep understanding of currency markets. His years in global finance, combined with an intuitive grasp of trends, delivers insightful, up-to-the-minute foreign exchange analysis.

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