The silver market is currently facing instability as the XAG/USD pair drops below the $30 threshold due to a recent increase in US yields following a strong US Non-Farm Payroll (NFP) report. This sudden shift has left investors reevaluating their positions amidst uncertain forecasts for the silver market in the near future. Let’s explore the factors driving this downturn and consider its implications moving forward.
Silver effect (XAG/USD) has plummeted below $30.00 in response to the upbeat US NFP report for May, which surpassed expectations in both job creation and wage growth. The stronger-than-expected data indicates robust labor demand and wage momentum, leading to a significant decline in the silver market.
The surge in US Treasury yields, fueled by the positive NFP report, has prompted a shift towards interest-bearing assets, strengthening the US Dollar Index (DXY) and putting pressure on non-yielding assets like silver. Additionally, the pause in the People’s Bank of China’s (PBoC) gold reserves accumulation has further impacted the silver market, with no change in gold reserves reported for May.
In terms of technical analysis, the silver market is showing signs of a bearish reversal, with a potential breakdown of the Head and Shoulders chart pattern on a four-hour timeframe. The price has dipped below the 50-period Exponential Moving Average (EMA) at $30.50, signaling a bearish trend, while the Relative Strength Index (RSI) has dropped below 40.00, indicating a downward momentum.
Looking ahead, a decisive break below the neckline at $29.00 could confirm a bearish trend for silver. Investors should closely monitor key support levels and market indicators to gauge the future direction of the silver market.
Disclaimer: The information provided here contains forward-looking statements and should be used for informational purposes only. It is essential to conduct thorough research before making any investment decisions. The author and FXStreet do not provide personalized investment advice, and readers should exercise caution and diligence in their financial endeavors.