Silver price (XAG/USD) holds onto two-day gains at around $62.00 during the European trading session on Thursday. The white metal trades firmly amid hopes of a further decline in oil prices.
In the European trade, the WTI Oil price trades 0.9% higher at around $75, but is closer to its three-week low of $73.51 posted on Wednesday.
Lower oil prices keep global inflation expectations in check, a scenario that diminishes fears of interest rate hikes by central banks. Such a case bodes well for non-yielding assets, like Silver.
Brent holds below $80 as hopes build for US–Iran deal on Strait of Hormuz
Analysts at ING highlight that "ICE Brent continues to trade below $80/bbl as the market pins its hopes on a deal between the United States (US) and Iran" that would "resume energy flows through the Strait of Hormuz." They note that Iran has "signalled progress toward this goal," having announced it has reached "an agreement with Oman on new shipping arrangements for the strait," with "a joint statement on the deal now being prepared," reinforcing market expectations of a potential easing in supply-route tensions.
Meanwhile, investors await the US Nonfarm Payrolls (NFP) data for July, which will be released on Friday. Investors will pay close attention to the official employment data, as its impact is likely to be significant on the Federal Reserve’s (Fed) interest rate expectations, given than the central bank has stopped providing forward guidance.
ADP slowdown reinforces TD Securities view of moderating US job gains
According to TD Securities, July ADP employment data "surprised to the downside, moderating to 44k (TD: 50k, cons: 65k)," reinforcing their view that job growth is cooling after a strong start to the year. The bank stresses that it does "not put much weight on ADP when it comes to m/m moves in NFP," but notes that "the trend in the data is in line with what we are expecting." They highlight that "both the monthly and weekly ADP data have moderated this summer," and judge that "a similar trend is likely to occur with NFP job gains," consistent with their expectation of softer official payrolls prints ahead.
Silver Technical Analysis
XAG/USD trades at around $61.85, holding a bullish near-term bias as it remains above the 20-day exponential moving average (EMA) at $59.43. The metal has reclaimed higher ground after its recent pullback, and the positioning over the short-term EMA suggests underlying demand remains in place.
Momentum, as reflected by the Relative Strength Index (14) at 55.71, stays in mildly positive territory, hinting that buyers retain the upper hand while avoiding overbought conditions.
On the downside, initial support emerges at the 20-day EMA at $59.43, where a break would signal fading bullish pressure and force a return to the July 17 low at $54.77. Looking up, the July high at $63.28 is the key hurdle for the Silver price; above that, it could extend the advance towards the June 22 high at $67.17.
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