Silver Rebounds Above $73, But Weak Sentiment Lingers

Key Moments

Market Overview

Silver prices (XAG/USD) trade about 1.2% higher around $73.60 during the Asian session on Thursday, recovering part of Wednesday’s steep decline. The bounce unfolds against a backdrop of concern that a prolonged United States blockade of Iranian sea ports could weigh on the metal’s broader outlook if Washington and Tehran fail to secure a lasting agreement.

Despite the intraday advance, the broader tone around Silver remains cautious, as traders assess the implications of ongoing tensions and their potential impact on global energy flows and monetary policy expectations.

US Blockade Concerns and Macro Backdrop

On Wednesday, US President Donald Trump told The New York Post’s “Pod Force One” program that the US maritime blockade could remain in place until Labor Day, while also conveying that he viewed that outcome as unlikely.

With Labor Day on September 7, the possibility that the blockade could extend to that date – implying no permanent peace arrangement and continued constraints on energy shipments through the Strait of Hormuz – is seen as negative for precious metals and for currencies of economies heavily reliant on imported oil.

Silver has lagged since the Middle East conflict began, as higher oil prices have fueled global inflation pressures and pushed market participants to position for a more hawkish Federal Reserve stance. This marks a notable shift from expectations for two rate cuts before the conflict started.

In theory, elevated interest rates from the Fed weigh on non-yielding assets such as Silver, reducing their relative appeal compared with interest-bearing instruments.

US Labor Data and Fed Expectations

On the US data front, the May ADP Employment Change report released on Wednesday exceeded forecasts and has influenced sentiment ahead of the official labor market report. The data showed that the private sector added 122K jobs, surpassing the consensus estimate of 117K and the prior reading of 105K.

This stronger-than-expected reading has helped set the tone for the May Nonfarm Payrolls (NFP) report, which is due on Friday, as investors gauge how labor market dynamics might shape the Fed’s policy path and, by extension, demand for precious metals.

Technical Outlook for XAG/USD

At the time of writing, XAG/USD changes hands near $73.35, modestly higher on the day. However, the short-term technical picture stays bearish, with prices trading below the 20-day Exponential Moving Average (EMA), currently located at $76.02. This positioning underscores a negative bias.

Momentum indicators echo this cautious stance. The Relative Strength Index (RSI) holds near 43, below the neutral 50 mark, signaling that selling pressure remains in place and that a clear bullish reversal signal is absent.

On the upside, the 20-day EMA at $76.02 is the first key resistance. A sustained move above that level would be needed to alleviate immediate downside pressure and could pave the way for a broader recovery toward the May 25 peak at $78.83.

On the downside, traders are watching recent support zones. A decisive break below the May 28 low at $71.79 could trigger further weakness, exposing the April 7 trough at $68.28.