Silver Price Forecast: Cooling Non-Farm Payrolls Weaken Fed Rate Hike Expectations, Silver Expected to rebound Toward $70.

TradingKey - As of the Asian session on July 3, silver ( XAGUSD) prices extended yesterday's post-NFP rebound momentum, reclaiming the level above $62. Technical indicators suggest that silver may continue to rally, with the potential to test the $70 mark.

Non-farm payrolls dampen Fed rate hike expectations, supporting a rebound in silver prices.

From a fundamental perspective, the U.S. released June nonfarm payrolls data yesterday, showing that nonfarm payrolls increased by only 57,000, significantly below the market consensus of around 115,000. Additionally, payrolls for April and May were revised down by a combined 74,000. The unemployment rate fell from 4.3% to 4.2%, ostensibly showing labor market resilience, but the participation rate slipped to 61.5%, indicating that the decline in the unemployment rate did not stem entirely from improvements in job creation. Average hourly earnings rose 0.3% month-over-month and 3.5% year-over-year, indicating that wage growth remains sticky.

Following the release, the slowdown in employment growth cooled market bets on a near-term Federal Reserve rate hike. According to the CME FedWatch Tool, the probability of a 25-basis-point rate hike at the July 29 FOMC meeting fell to 21.9% from 31.5% prior to the payrolls report. Meanwhile, the policy-sensitive 2-year Treasury yield slid to around 4.11%, and the dollar weakened in tandem. For silver, a softer dollar reduces purchasing costs for non-U.S. buyers, while falling yields lower the opportunity cost of holding non-yielding assets, drawing investment back into silver.

Fed Rate Decision Expectations, Source: CME FedWatch

Institutional opinions are divided. ANZ believes that the softer employment data will alleviate pressure on the Fed to hike rates in July, noting that a low-interest-rate environment typically favors non-yielding assets like gold, and silver will benefit from the same logic. MarketWatch cited Santander economist Stephen Stanley as saying that the market should not overinterpret this payrolls report, as the labor market remains relatively stable and the Fed's primary focus is still inflation. A WSJ analysis also highlighted that the jobs report offered insufficient signals, and upcoming CPI and PPI data will be more critical than a single month's nonfarm payrolls in determining whether the Fed continues its tightening cycle.

Silver Price Analysis: Weekly Chart Stabilizes, Silver May Rebound Toward $27.8

Silver price weekly chart, Source: TradingView

Looking at the weekly chart of silver, the silver price pulled back to the SMA60 moving average for two consecutive weeks without showing a breakdown. Last week, it even closed in positive territory above the SMA60 to halt the decline, thereby initiating a rebound trend this week. This indicates that the support at the weekly SMA60 moving average is strong, and the rebound trend is expected to continue in July. The primary rebound target will be to test up towards the resistance level around $67.80, with a potential to further test up towards $70.

Silver price daily chart, Source: TradingView

Looking at the daily chart of silver, after breaking below the $62 support level, the support turned into resistance. However, the silver price did not break below $56 for several consecutive trading days, indicating that the silver price has found support at this position. This means a short-term bottom has formed, thereby initiating a technical corrective rebound trend.

Currently, the silver price has rebounded to just below the $62 resistance level. If today's closing price can establish a solid foothold above $62, the upside potential for silver will be unlocked, with the possibility of further rising to test the resistance level near $67.80. Conversely, if today's closing price is below $62, the silver price may continue to test the $56 support level on the downside in the short term.