Silver rebounds above $64 as weak US jobs data challenges hawkish Fed bets

• Silver rebounds to around $64.30 on Wednesday after erasing earlier losses.
• Weak private-sector employment data provides some support to the precious metal, although elevated Treasury yields limit gains.
• Markets continue to price a high probability of an interest-rate hike this month following hawkish comments from Federal Reserve officials.

Silver (XAG/USD) rebounds on Wednesday, trading around $64.30 at the time of writing, up 0.32% on the day after recovering from earlier losses. The precious metal finds some support from weaker-than-expected United States (US) employment data, although elevated US Treasury yields and expectations of tighter monetary policy continue to limit its upside.

The latest labor-market figures provide some relief for Silver. The Automatic Data Processing (ADP) Employment Change report shows that the US private sector added 38K jobs in August, below market expectations of 47K and the previous increase of 46K. The softer reading adds to signs of cooling labor demand and could complicate the case for additional monetary tightening.

However, expectations surrounding the Federal Reserve (Fed) remain broadly hawkish. Markets see a roughly 64% chance that the central bank will raise interest rates at its September 15-16 meeting, according to the CME FedWatch tool, compared with 36% a week earlier.

Higher rate expectations have pushed US Treasury yields sharply higher, creating a significant headwind for Silver as a non-yielding asset. The benchmark 10-year US Treasury yield reached 4.81% on Wednesday, its highest level since 2023, before easing modestly.

At the same time, rising tensions in the Middle East have driven Oil prices higher, adding another layer of uncertainty to the inflation outlook. Persistent energy-driven price pressures could encourage the Fed to maintain a restrictive stance for longer, potentially keeping Treasury yields elevated and limiting demand for precious metals.

The US Dollar (USD) also remains supported by the prospect of higher interest rates, although disappointing employment figures prevent the Greenback from gaining stronger momentum.

Against this backdrop, Silver's rebound remains caught between weakening US labor-market signals and persistent expectations of tighter Fed policy. Investors will now turn their attention to Friday's Nonfarm Payrolls (NFP) report, which could provide further clues on the strength of the US labor market and reshape expectations for the Fed's September decision.

XAG/USD technical analysis

In the one-hour chart, XAG/USD trades at $64.36, retaining a bearish near-term tone as it holds below the 100-hour simple moving average (SMA) at $66.81 and the 200-hour SMA at $67.80. This configuration suggests the recent bounce is a correction within a broader downswing, with the cluster of moving averages above price reinforcing the cap on recovery attempts. The Relative Strength Index (RSI) at 48.75 sits just below the neutral line, hinting at easing downside pressure but not yet signaling a decisive shift in momentum.

On the topside, immediate resistance emerges at $66.70, ahead of the horizontal barrier at $67.50, while the 100-hour SMA at $66.81 and the 200-hour SMA at $67.80 stack additional supply if bulls attempt a stronger rebound; a sustained move above these levels would be needed to alleviate the current bearish bias and expose the higher resistance at $71.12. On the downside, initial support is seen at $63.32, with further cushions at $62.19 and $60.87, where buyers would likely look to slow or halt any renewed decline.

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