Silver Price Analysis: XAG/USD Rallies for Traders’ Flight to Safety

• Silver advances more than 2% and ends the week practically flat.
• US employment data was mixed, but the unemployment rate rose, signaling a cooling job market.
• Investors rushed into precious metals, unsure of next week’s inflation data, and punished the dollar.

The price of silver rebounded after the mixed US jobs report. However, the unemployment rate rose, taking pressure off the US Federal Reserve (Fed). At the time of writing, XAG/USD is trading at $20.49 per troy ounce.

The Federal Reserve is expected to raise rates gradually as the unemployment rate rises

Wall Street extended its losses on a risk aversion drive. The US Department of Labor revealed that non-farm payrolls for February increased by 311,000 jobs, more than the 225,000 expected. Employment figures for January dropped from 517,000 to 504,000. The unemployment rate was 3.6%, above the forecast of 3.4%, indicating a weaker labor market. Wages rose 4.6%, and attention turned to next week’s US inflation data.

Earlier in the week, Fed Chairman Jerome Powell said that a larger and potentially faster interest rate hike may be necessary in his appearance before the US Congress. He added that the US economy remains strong and the Fed will be watching non-farm payroll numbers and February Consumer Price Index (CPI) readings next week.

The reaction of market participants is that the Federal Reserve will raise 25 basis points at the next meeting in March. Based on US jobs data, money market futures expect Powell & Co. to cut rates by the end of 2023.

Investors also sent the dollar lower, with the US Dollar Index (DXY) shedding 0.87% to 104.360. US Treasury yields extended their losses, with the 10-year yield falling 16 basis points to 3.741%, a tailwind for precious metal prices. The XAG/USD pair is up more than 2% after hitting lows around $19.92.

XAG/USD Technical Levels