Summary:
Silver prices continue to hover near 2025 highs, but without a fresh catalyst, the rally stalls. Key support at $35.40 remains intact for now as investors turn their attention to U.S. jobs data and Fed policy signals.
Silver Consolidates Near Highs as Market Awaits Fresh Catalyst
Silver (XAG/USD) ended last week virtually unchanged at $35.99, holding onto substantial 2025 gains but struggling to extend its rally. Market participants are eyeing Thursday’s U.S. Non-Farm Payrolls report, which could be the trigger silver needs to break out of its current range.
Fed Signals Remain Mixed, Pressuring Upside Momentum
The Federal Reserve kept interest rates unchanged in June at 4.25%-4.50% and emphasized a cautious approach to monetary easing due to lingering inflation. Markets currently price in a 76% chance of a rate cut in September, while July remains unlikely. This uncertainty has capped silver’s short-term upside as real yields remain elevated.
Dollar Weakness Offers Underlying Support
The U.S. Dollar Index (DXY) has declined sharply—down over 2.5% in the past month and 8% year-on-year. While the greenback’s longer-term weakness supports metals like silver, geopolitical and trade-related uncertainties, including sudden U.S. tariff threats, continue to create headwinds.
Industrial Demand Anchors Prices
Silver’s role in the solar energy, EV, and electronics sectors remains a strong tailwind. Fabrication demand is on track to exceed 700 million ounces this year. Persistent supply deficits—despite increased recycling—offer a solid floor for prices, helping silver outperform other commodities.
Jobs Data and ISM Readings Could Be Game-Changers
This week’s primary risk event is the U.S. jobs report. If job creation falls below expectations, it could accelerate Fed rate cut forecasts, weakening the dollar and boosting silver. Conversely, strong labor market data might delay the rally but is unlikely to reverse the broader bullish trend. Other data in focus includes the ISM manufacturing index and industrial metrics like Tesla’s Q2 deliveries.
Technical Levels to Watch
- Key Support: $35.40 – Successfully defended for three consecutive weeks.
- Breakdown Zone: If $35.40 fails, a decline toward $32.81 (50% retracement) is likely.
- Major Support: $31.65 – 52-week moving average and long-term trendline.
- Bullish Breakout Trigger: A decisive close above $37.51 could open the door for a rally toward $44.22, the multi-year high.
Conclusion:
Silver remains well-supported by industrial fundamentals and a weakening dollar, but near-term price action hinges on incoming macroeconomic data. Traders should prepare for volatility around Thursday’s U.S. employment figures. A weak print may ignite the next leg higher, while strong data could extend the consolidation phase without triggering a major reversal.
Stay Updated with Daily Forex Pakistan.