XAG/USD extends correction ahead of US NFP data: Silver price forecast

$51.40 comes into view as Silver extends its decline before US NFP data.
With US NFP in focus, the US Dollar advances sharply.
Last week, the Fed’s Logan described the labour market as broadly balanced, if anything slightly tight.

$51.40 is the level Silver (XAG/USD) is approaching. During Friday’s European session, the metal extends its correction from the weekly high of $53.45. Renewed US Dollar strength weighs on Silver as investors adopt a cautious stance before October’s United States (US) Nonfarm Payrolls (NFP) release at 13:30 GMT.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

At the time of writing, a 0.36% gain puts the US Dollar Index (DXY) near 101.92. The index measures the Greenback against six major currencies.

US Dollar: Today’s Currency Moves

Against the major currencies listed below, today’s percentage moves in the US Dollar (USD) are shown in the table. Its largest gain was against the Australian Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.34%	0.31%	0.09%	0.32%	0.88%	0.68%	-0.02%
EUR	-0.34%		-0.03%	-0.25%	-0.01%	0.54%	0.36%	-0.36%
GBP	-0.31%	0.03%		-0.19%	0.01%	0.58%	0.39%	-0.32%
JPY	-0.09%	0.25%	0.19%		0.24%	0.79%	0.58%	-0.11%
CAD	-0.32%	0.00%	-0.01%	-0.24%		0.55%	0.34%	-0.35%
AUD	-0.88%	-0.54%	-0.58%	-0.79%	-0.55%		-0.20%	-0.89%
NZD	-0.68%	-0.36%	-0.39%	-0.58%	-0.34%	0.20%		-0.68%
CHF	0.02%	0.36%	0.32%	0.11%	0.35%	0.89%	0.68%

Percentage moves between the major currencies appear in the heat map. Select the base currency in the left-hand column and the quote currency in the top row. Selecting the US Dollar on the left and reading across to the Japanese Yen, for instance, gives the percentage change for USD (base)/JPY (quote).

In technical terms, US Dollar appreciation makes Silver less attractive to investors on a risk-reward basis.

65K US NFP Forecast; Other Key Labour Data in Focus

Estimates put new hiring by US employers at 65K, compared with 29K in September. The Unemployment Rate is expected to remain at 4.2%.

Annual growth in Average Hourly Earnings, a key wage indicator, is forecast to moderate to 2.9% year-on-year (YoY) from September’s 3%. The monthly increase is expected to reach 0.3%, up from the previous 0.1% reading.

US NFP Seen Having Limited Effect on Fed Policy Expectations

Expectations for Federal Reserve (Fed) interest rates are unlikely to shift substantially on the US NFP release. Officials’ recent comments following the late-October monetary policy decision have signalled that the central bank will remain on a tightening path amid upside risks to inflation.

Last week, Dallas Fed Bank President Lorie Logan called for “at least two more quarter-point rate hikes”. She described inflation’s failure to move back towards the 2% target as “unacceptable”. On employment conditions, Logan said, “Labor market is balanced, perhaps tightening a bit.”

$51.45 Silver: Weekly Technical Outlook

At $51.45 on the weekly chart, XAG/USD retains a bearish near-term bias. The price remains below the 9-week Exponential Moving Average (EMA) of $56.85 and substantially beneath the 61.8% Fibonacci retracement at $59.35. A Relative Strength Index (14) reading of 36.47 places it just above oversold territory. This suggests some easing in downward momentum, although sellers remain in control following the extended retreat from the cycle highs.

The first upside hurdle is the 9-week EMA near $56.85, ahead of the 61.8% retracement at $59.35. A stronger recovery would bring further resistance into focus at the 50% retracement near $71.24 and the 38.2% level of $83.13. Below current prices, the first significant support lies at the 78.6% Fibonacci retracement of $42.41. Beyond that sits the structural low near $20.84, marking the 100% retracement of the broader decline.

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

Silver: Key Questions Answered

Silver’s Role in Investment Portfolios

Historically a store of value and a means of exchange, Silver remains a heavily traded precious metal. Gold attracts greater interest, but traders may choose Silver for portfolio diversification, its intrinsic value or its potential to hedge against high inflation. Investors can hold the physical metal as coins or bars. Alternatively, they can gain exposure through instruments such as Exchange Traded Funds that track Silver’s international market price.

Key Drivers of Silver Prices

A broad range of influences can drive Silver prices. Its safe-haven characteristics mean geopolitical instability or concerns over a severe recession can lift prices, though typically less than Gold. Lower interest rates also tend to benefit Silver because it pays no yield. As Silver is priced in US dollars (XAG/USD), movements in the US Dollar (USD) matter: a stronger Dollar generally restrains prices, while a weaker one is likely to lift them. Investment demand, mine supply and recycling rates are further influences. Silver is far more abundant than Gold.

Industrial Demand and Silver Price Movements

Among metals, Silver has one of the highest levels of electrical conductivity, exceeding both Copper and Gold. This supports widespread industrial use, notably in electronics and solar energy. Rising demand can push prices higher, whereas falling demand generally weighs on them. Economic conditions in the US, China and India can also drive price fluctuations. Large industrial sectors in the US and, especially, China use Silver across a range of processes. In India, consumer demand for Silver jewellery is another important price determinant.

Gold’s Influence on Silver Prices

With both metals sharing safe-haven characteristics, Silver generally tracks Gold and typically rises when Gold advances. Their relative valuations can be assessed using the Gold/Silver ratio: the number of ounces of Silver equivalent in value to one ounce of Gold. A high reading may be interpreted by some investors as Silver being undervalued or Gold being overvalued. A low reading, by contrast, may indicate that Gold is undervalued compared with Silver.