Silver Holds Below $66.25 as Traders Eye NFP and Fed Path

Key Moments

Macro Drivers and Fed Expectations

Silver (XAG/USD) is struggling to extend its recent recovery above the $66.25 region during the European session on Thursday, with price action turning more range-bound as the market waits for the release of United States Nonfarm Payrolls (NFP) data for August on Friday.

TD Securities forecasts that August NFP will “rebound to 95k after July posted a decline of 23k,” while warning that “risks to our payrolls forecasts appear hawkish, and we would not rule out an outsized positive surprise.” The firm also expects the unemployment rate to have “gone sideways at 4.1% with balanced risks,” pointing to limited changes in headline labor market indicators.

Investors are watching the labor report closely because it is expected to shape expectations for the Federal Reserve’s policy trajectory. According to TD’s analysts, “a modestly hawkish employment report will reaffirm the Fed’s attention on inflation, but it will be by itself unlikely to push the Committee towards hikes,” as they “continue to expect that inflation data can print modestly, allowing the Fed to keep rates on hold for now.”

Market pricing, as reflected by the CME FedWatch tool, shows that traders assign a two-in-three probability that the Fed will raise interest rates at its September meeting. The broader backdrop remains that the Fed is expected to increase rates in its policy gathering this month, a factor that generally limits the appeal of non-yielding assets such as Silver.

Oil Market Tensions and Inflation Concerns

Beyond the jobs data and Fed outlook, the rally in oil prices is emerging as another headwind for the metal. Energy costs have moved higher as shipments through the Strait of Hormuz – a key route for nearly one-fifth of global energy flows – have been constrained.

Elevated oil prices tend to fuel global inflation expectations. In turn, this can heighten worries that central banks may need to tighten policy further or keep rates higher for longer. Such an environment typically undermines demand for assets that do not offer a yield, including Silver, and can therefore curb attempts by XAG/USD to extend its recovery.

Technical Picture for XAG/USD

On the daily chart, XAG/USD is trading around $66.00. The pair is holding above the 20-day Exponential Moving Average (EMA), which comes in at $65.51, supporting a constructive near-term tone as the market extends its rebound from the mid-$50s area.

The 14-period Relative Strength Index (RSI) stands at 53.04, placing it in neutral territory with a slight upward bias. This configuration suggests that buying interest still has an advantage without the market looking overstretched for now.

Immediate downside support is located at the 20-day EMA at $65.51, where any deeper pullback is expected to draw new buyers. On the upside, the August peak near $71 remains a major resistance zone that bulls would need to clear to confirm a more decisive bullish continuation.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Silver as an Investment Asset

Silver is a widely traded precious metal that many investors use as a store of value and a way to diversify portfolios. It has historically served as both a medium of exchange and a hedge in periods of elevated inflation. Market participants can gain exposure either through physical holdings such as coins and bars, or via instruments like Exchange Traded Funds that mirror its price performance.

Key Drivers of Silver Prices

Movements in Silver prices are influenced by several macro and market-specific forces. Periods of geopolitical tension or concerns about severe economic downturns can support Silver due to its safe-haven characteristics, even if its reaction is typically smaller than Gold’s. As a yieldless asset priced in US Dollars under the XAG/USD pair, Silver tends to benefit when interest rates fall or when the Dollar weakens, and it often comes under pressure when yields and the Dollar rise.

Other elements such as investment flows, mining production – with Silver being more plentiful than Gold – and recycling activity also shape supply-demand dynamics and price behavior.

Industrial Demand and the Gold Link

Silver has extensive industrial applications, particularly in electronics and solar-related technologies, supported by its very high electrical conductivity, which exceeds that of Copper and Gold. Shifts in industrial demand can therefore be a significant driver of price, with stronger demand generally pushing prices higher and weaker demand exerting downward pressure. Economic conditions in the US, China, and India can be especially important, given their industrial base and, in India’s case, consumer demand for Silver jewelry.

In addition, Silver often tracks moves in Gold. When Gold advances, Silver typically follows, reflecting their shared role as safe-haven assets. The Gold/Silver ratio – the number of ounces of Silver needed to match the value of one ounce of Gold – is frequently monitored by investors to judge relative value. A high ratio is sometimes seen as indicating that Silver may be undervalued or Gold overvalued, while a low ratio can be interpreted the other way around.