Silver Price Forecast: Can Nonfarm Payrolls Reverse Silver’s Downtrend?

TradingKey - On June 5, ET, silver ( XAGUSD) prices came under downward pressure intraday due to the stalemate in U.S.-Iran negotiations, briefly falling to around $71. Notably, with U.S. May non-farm payrolls data set for release today, can silver's decline be reversed?

Stalled U.S.-Iran negotiations weigh on silver; market eyes May non-farm payrolls.

Latest reports show that the U.S. House of Representatives passed a War Powers resolution on June 3rd to restrict military actions against Iran, reflecting mounting domestic anti-war pressure; shortly thereafter, Trump claimed that peace negotiations were nearing their final stages, but the Iranian Foreign Minister stated that there had been no substantive progress, and the Iranian-backed Hezbollah also rejected a U.S.-brokered ceasefire proposal, undermining market confidence in the Middle East peace process.

Market performance indicates that, influenced by the Middle East situation, this week WTI ( USOIL) spot crude oil prices are still poised to record a gain of over 5%, while Brent spot crude prices are on track to rise by over 3%.

The failure of the U.S.-Iran situation to de-escalate means that risks to energy transportation are unlikely to fully recede, and oil prices will continue to remain elevated. High oil prices will lift inflation expectations, fueling market concerns that the Federal Reserve may have to maintain high interest rates for a longer period. For non-yielding assets such as silver, rising real interest rates and a strengthening dollar will increase holding costs, thereby weighing on prices. Furthermore, silver possesses distinct industrial attributes; high oil prices squeeze corporate profits and consumer demand, which is also expected to drag down industrial demand expectations.

Beyond the U.S.-Iran situation, the U.S. May non-farm payrolls (NFP) report, scheduled for release this Friday, will be critical for silver's short-term direction. Market consensus expects an addition of approximately 85,000 jobs in May, down from the over 100,000 seen in the previous two months; the unemployment rate is projected to hold at 4.3%, while average hourly earnings are forecast to rise 0.3% month-over-month, slightly above April's 0.2%, though year-over-year wage growth is expected to slow to 3.4% from 3.6%.

For silver, if the NFP data is significantly below expectations, accompanied by a rising unemployment rate and slowing wage growth, the market may pivot back to trading on expectations of future Fed rate cuts, leading to a retreat in Treasury yields and the U.S. dollar, which would support higher silver prices.

Should the NFP exceed expectations—particularly if wage growth proves stronger than anticipated—it would reinforce the view that the U.S. labor market remains resilient and that inflationary pressures are unlikely to subside quickly. Combined with the U.S.-Iran tensions driving up oil prices, the market might conclude that the Fed needs to keep interest rates high for longer, potentially putting short-term pressure on silver.

If the NFP results are close to expectations, the market is likely to continue trading based on the U.S.-Iran situation and oil price volatility.

Silver Technical Analysis: Price May Fall to $64

Silver price daily chart, Source: TradingView

According to the silver daily chart, following a significant drop in January, price action has entered a wide consolidation range between $61 and $96. As the lower highs of the candlesticks suggest, bearish momentum in the market has gradually intensified; meanwhile, silver's move below the 144-day moving average has further bolstered this bearish sentiment.

Market data shows that silver prices briefly fell below the May 28 low of $71.80 today, further opening the downside for a potential test of the $70 mark. If this level fails to hold, silver prices will likely decline further to test key support at $64, with a potential drop toward $61.

Silver price weekly chart, Source: TradingView

From the weekly chart, the current price is oscillating near $72-$74; the primary focus is whether it can consolidate within this range. To the upside, resistance may be encountered near $80-$82, with a breakout potentially targeting $90-$95. To the downside, $65-$67 is the key support zone; if this area is breached, prices may further retreat toward $60-$62.