Silver Price Forecast: XAG/USD Eyes Breakout as Bulls Defend Channel Support
Silver started the week with a modest pullback after a strong U.S. jobs report dashed expectations for near-term interest rate cuts.
Quick overview
- Silver experienced a modest pullback after a strong U.S. jobs report reduced expectations for near-term interest rate cuts.
- The Labor Department reported 139,000 new jobs in May, surpassing forecasts and keeping the unemployment rate steady at 4.2%.
- Easing trade tensions between the U.S. and China have reduced geopolitical anxiety, but global tensions remain due to ongoing military operations in Ukraine.
- Technically, silver is consolidating below a key resistance level at $36.88, with bullish potential if it breaks out above this level.
Silver started the week with a modest pullback after a strong U.S. jobs report dashed expectations for near-term interest rate cuts. As of Tuesday, XAG/USD is hovering around $36.53, pausing just below a key resistance level at $36.88 after a strong two-day rally.
On Monday, the Labor Department reported 139,000 new jobs in May, surpassing forecasts. Wage growth also beat expectations, while the unemployment rate held steady at 4.2%. These data points have significantly reduced the odds of a Federal Reserve rate cut before October.
A stronger U.S. dollar index added further headwinds for silver by making it more expensive for overseas buyers. Meanwhile, President Trump’s comments about an upcoming Fed chair announcement injected more uncertainty into monetary policy expectations, keeping commodity markets cautious.
US-China Talks Ease, but Global Risks Remain
Silver’s safe-haven demand is facing mixed signals. On one hand, easing trade tensions between the U.S. and China have reduced geopolitical anxiety. Three senior White House economic advisors are currently in London meeting with their Chinese counterparts in an effort to restart stalled negotiations.
However, global tensions haven’t disappeared. Over the weekend, Russia intensified military operations near Ukraine’s Dnipropetrovsk region, and a U.S. travel ban affecting 12 countries took effect on Monday. These developments could support silver’s haven appeal if geopolitical risks re-escalate.
Technical Outlook: Bulls Guard $36.10 Mid-Channel
From a technical standpoint, silver is trading within a well-defined ascending parallel channel. After breaking out above $35.84, price rallied into resistance at $36.88, where it’s now consolidating. The pattern resembles a bullish flag, typically seen before continuation moves.
The 14-period RSI has cooled to 62.93 after briefly entering overbought territory above 70, giving bulls breathing room for another push higher.
Trade Setup to Watch:
- Entry (long): On breakout above $36.88
- Stop-loss: Below $36.10 (mid-channel support)
- Target 1: $37.30
- Target 2: $37.71
- Risk Note: Avoid early entry; wait for momentum confirmation on breakout
As long as silver holds above the channel’s midpoint, the trend structure remains constructive. But a drop below $36.10 could prompt a retest of the $35.84 breakout level or the lower boundary of the channel.
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