Forecast Silver Price to Reach $31 as US Labor Market Strength Softens in June

Silver prices jumped near $31.00 as US yields decreased following an uninspiring NFP report, exceeding estimates while still falling short of May’s reading. And silver strengthened following an Falling Channel breakout.

Silver (XAG/USD) reached its three-week high near $31.00 during Friday’s American session, as US bond yields decreased following reports that showed the labor market losing momentum in June Nonfarm Payrolls report.

The Unemployment Rate increased to 4.1% versus estimates and prior release’s 4.0% rate. Employers hired more individuals at 206K than anticipated with estimates being reduced from 190K while prior release (218K was downwardly revised from 272K).

Average hourly Earnings also declined expectedly in June; on an annual and monthly basis they experienced growth at a much slower pace of 0.3% and 3.9%, respectively.

Soft wage data, downwardly revised payrolls and an increase in jobless claims is indicative of softening labor market conditions; this would add support to market participants’ expectations that Federal Reserve (Fed) rate cuts might begin shortly thereafter; they currently anticipate that reductions should begin from September.

10-Year US Treasury Yields have dropped below 4.3%. A decrease in yields reduces the opportunity cost associated with investing in non-yielding assets such as Silver.

The US Dollar Index (DXY), which tracks its value against six major currencies, remains on an upswing at around 105.00.

Silver technical analysis
Silver price strengthened following its breakout from a four-hour Falling Channel formation. An upside break resulted in a bullish reversal while 20/50 Exponential Moving Averages crossing at $29.30 indicated a bullish trend.

When the 14-period Relative Strength Index (RSI) transitions from its neutral range of 50.00-65.00 into bullish territory between 60.00-80.00, that indicates momentum has moved in favor of upward momentum.

Silver four-hour chart
Silver FAQs
Silver is an increasingly popular precious metal among investors and has long served as both an exchange medium and store of value. Although less popular than Gold, traders may turn to it for diversifying their investment portfolio or as potential hedges during periods of high inflation. Investors can purchase physical Silver coins or bars directly, or via vehicles like Exchange Traded Funds that track its price on international markets.

Silver prices can fluctuate based on numerous factors. Geopolitical instability or fears of recession may push its value up due to its safe haven status; but only to a lesser degree than Gold’s. As it’s yieldless and priced in US Dollars (XAG/USD), how the US Dollar behaves also influences how prices change; strong USDs usually keep Silver at bay while weak Dollars drive prices higher; investment demand, mining supply (Silver is much more abundant than Gold), recycling rates can all have an influence.

Silver has long been used in industrial sectors like electronics or solar energy due to its superior electrical conductivity compared to Copper or Gold. Rising demand can drive prices higher while declining demand can lower them; fluctuations in US, Chinese, and Indian economies also play a factor: while major industries use Silver as part of various processes; in India demand from consumers for jewellery sets prices accordingly.

Silver prices tend to track Gold closely. When its value rises, Silver tends to do too; their status as safe-haven assets is similar. The Gold/Silver ratio helps determine their relative valuation; high ratios could indicate either that Silver is undervalued relative to Gold while low ones could suggest the opposite situation – an investor might view an overvaluation in either case; investors might interpret a low ratio as suggesting Gold may undervalued relative to Silver.