Silver remains above $65.50, following a peak of $66.64. The rise is attributed to weak US labour figures and prospects of further Federal Reserve easing.
In October, US Nonfarm Payroll saw a decline by 105,000 but rebounded with a 64,000 increase in November. The unemployment rate climbed to 4.6%, the highest in four years, as wage growth slowed.
Expectations for a March rate cut stay at 42%, with focus on November’s US Consumer Prices Index for further insights into the Federal Reserve’s plans.
The XAG/USD is trading at $65.97 today, showing an increase of nearly 3.5% from its opening. Technical analysis indicates resistance near $66.80, with further targets at $68.30 and $70.00.
Support levels are at previous highs of $64.72, trendline support at $63.30, and the December low of $60.80.
Silver serves as a worldwide traded investment due to its value and status as a medium of exchange. Prices are influenced by geopolitical risks, interest rates, US Dollar strength, and supply-demand dynamics.
Industrial use, especially in electronics and solar energy, and its relationship with Gold prices, also play a role in its valuation.
We are seeing silver prices holding strong near all-time highs, supported by signs of a cooling US economy. The latest Nonfarm Payroll data from last month showed a weak gain of only 64,000 jobs, while October’s figures were revised to show a net loss of jobs. This poor labor market performance has solidified our expectations that the Federal Reserve will start cutting interest rates.
The focus for the next few days is squarely on the US Consumer Price Index report, which is due out this Friday. Market pricing currently indicates a 42% probability of a rate cut by March 2026, and a soft inflation number would almost certainly increase those odds. We saw a similar situation back in the second half of 2024, where disappointing economic data preceded a significant rally in precious metals as Fed easing became the dominant narrative.
Given the strong upward momentum, we should consider strategies that benefit from further price increases, such as buying call options. The technical picture suggests resistance near $66.80, with a convincing break opening the door to the $68.30 level. This bullish view is supported by robust industrial demand, with the latest industry reports showing a 9% year-over-year increase in silver consumption for solar panel manufacturing.
However, we must be cautious as the Relative Strength Index is approaching overbought levels, hinting that this rally could be due for a pause. Ahead of Friday’s critical inflation data, it would be prudent to protect long positions by purchasing put options with a strike price below the previous high of $64.72. This acts as a cheap insurance policy against any unexpected strength in the inflation figures that could delay projected Fed rate cuts.
We should also watch the Gold/Silver ratio, which has fallen to a 2-year low, indicating silver’s recent outperformance. If this ratio begins to climb, it could be an early warning that silver’s rally is losing steam relative to gold. This environment of high uncertainty around a major data release suggests that volatility is likely to spike, making options strategies that profit from large price swings potentially attractive.
