XAG/USD Falls as US Jobs Surge Strengthens Dollar

Traders' Opinions

Summary:

Silver falls toward $65.70 after strong US payrolls revived expectations for another Fed rate hike. Upcoming PPI and CPI data could determine the next move, while US-Iran tensions may provide some safe-haven support.

SELL XAGUSD

EXP

TRADING

65.500

Entry Price

62.000

68.500

65.819 -0.398 -0.60%

0.0

Pips

Flat

62.000

Exit Price

65.500

Entry Price

68.500

Silver remains under selling pressure on Monday, with XAG/USD falling around 0.79% to $65.70 as a surprisingly strong US employment report strengthens the Dollar and revives expectations that the Federal Reserve could tighten monetary policy again.

Friday's labor-market figures significantly exceeded expectations. The US economy added 162,000 jobs in August, almost three times the 56,000 increase economists had anticipated. The Unemployment Rate remained unchanged at 4.1%, while annual wage growth moderated slightly to 3.1% from 3.2%.

The resilience of the labor market gives the Fed greater flexibility to maintain restrictive monetary conditions, particularly while higher energy costs threaten to generate renewed inflation pressure. That combination has weighed on precious metals, with Silver particularly sensitive to expectations for higher interest rates because it offers no yield.

Attention now shifts from employment to inflation. US PPI and CPI figures due later this week could determine whether expectations for another Fed hike gain further momentum. Fed Governor Christopher Waller recently indicated that he could support leaving rates unchanged if incoming data provide convincing evidence that inflation is cooling, making this week's price data especially important.

At the same time, geopolitical developments are complicating the outlook. Tensions surrounding the Strait of Hormuz remain elevated following another exchange of attacks between US and Iranian forces over the weekend. Concerns about disruption to Middle Eastern energy supplies are keeping oil prices elevated and could reinforce inflation risks if the confrontation persists.

This creates conflicting forces for Silver. Higher energy prices could strengthen the case for tighter Fed policy, supporting the Dollar and pressuring XAG/USD. On the other hand, further geopolitical escalation could increase demand for traditional safe-haven assets and provide some protection against deeper losses.

For now, however, the combination of stronger US employment growth, renewed Fed tightening expectations and Dollar strength is dominating Silver's near-term direction, leaving the metal vulnerable ahead of this week's crucial inflation releases.

Technical Analysis

Silver remains exposed to further downside on the 4-hour chart after its recovery attempt lost momentum beneath the $67.00–$67.30 resistance zone. The rejection is significant because it follows the sharp reversal from above $71.00, suggesting that sellers continue to defend rallies and that the recent bullish trend is undergoing a deeper correction.

XAG/USD is currently trading around $65.50, an area that has acted as a short-term pivot. Price recovered strongly from the recent low near $63.20, but the rebound failed to regain the previous highs and instead produced a lower peak around $67.00. This deterioration in market structure keeps the immediate advantage with sellers.

A firm move below $65.00 would increase the likelihood of another decline toward the $62.00–$62.50 support zone. Given the importance of this area during the August rally, buyers could attempt to defend it and trigger a temporary recovery. However, unless that rebound is capable of reclaiming $65.50 and ultimately $67.30, it would likely represent another corrective move rather than the beginning of a fresh bullish leg.

The bigger downside risk emerges if $62.00 fails to hold. Such a breakdown would remove one of the strongest remaining support areas on the chart and could expose $60.00 before attention shifts toward the major $56.20–$56.80 demand zone.

Conversely, a sustained recovery above $67.30 would undermine the immediate bearish scenario and could bring $69.50 followed by the $71.00–$71.50 region back into play.

For now, repeated rejection from higher levels combined with the developing lower-high structure suggests that Silver remains vulnerable to another leg lower, initially toward $62.00, with considerably deeper losses possible if that support gives way.

TRADE RECOMMENDATION

SELL XAG/USD

ENTRY PRICE: 65.50

STOP LOSS: 68.50

TAKE PROFIT: 62.00

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XAG/USD Falls as US Jobs Surge Strengthens Dollar

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