Silver Not Yet Safe: Key Support Tested Ahead of US NFP Data
Silver prices (XAG/USD) continued to move cautiously at the start of the week following Friday's turmoil. In the Asian session, silver held around $80, attempting to establish a new foothold after hitting a four-week low of $73.33. The market is now focused on whether silver has truly found temporary support, or is this simply a pause before the next wave of selling.
The main sources of pressure come from a deadly combination: a strengthening US dollar, profit-taking after an extreme rally, and changing expectations of a tightening Fed policy stance. The impact is clear—silver, which had previously reached an all-time high of $121.66, has now corrected more than 30%, indicating that overcrowded market positions have finally been brutally "cleaned out."
The strengthening dollar makes silver increasingly unattractive from a risk-reward perspective, as the dollar-denominated precious metal becomes more expensive for non-dollar buyers. At the time of writing, the US Dollar Index (DXY) held firm near a weekly high of 97.33, keeping pressure on the precious metal.
A catalyst contributing to sentiment came from Washington: the White House nominated Kevin Warsh to replace current Fed Chairman Jerome Powell. Warsh is known to be more comfortable with a strong dollar and a tighter policy stance, leading the market to view the opportunity for "cheap money" as opposed to the previously expected interest rate cut narrative.
Given this situation, investors are now awaiting the January US Nonfarm Payrolls (NFP) data for clues to the next direction. If the employment data is strong, expectations of extended high interest rates could strengthen—and that typically holds back silver's recovery. Conversely, if the NFP weakens, the opportunity for a relief rally could emerge as the dollar/yields potentially weaken.
Technically, silver is currently trading around $81.38 and remains above the 50-day EMA at $79.50, which keeps the medium-term uptrend alive. However, the Relative Strength Index (RSI) at 44 indicates that momentum has cooled after the overbought phase. As long as the price can stay above the EMA area, there's still a chance for a recovery—but if it breaks below, the market could retest lower support and cause volatility to "explode" again. (asd)
Source: Newsmaker.id
