Silver Price Analysis: XAG/USD Soars to 6-Month Highs Above $23.20 on Dollar Weakness

• The price of silver fell to its daily low, but recovers to hit a six-month high of $23.22.
• The US Nonfarm Payrolls report shattered estimates as a wage hike put pressure on the Federal Reserve.
• Silver Price Analysis: Trending up, with an eye on $24.00 and beyond.

the price of silver It rose back above $23.00 after the release of an upbeat US jobs report bolstered the dollar, while US Treasury yields rose. Initially, the white metal pared some of its gains, heading towards its daily low of $22.59, though as the dollar weakens it is rising again. At the time of writing, XAG/USD is trading at $23.13.

Federal Reserve comes under pressure from upbeat US jobs report

Investor sentiment remains sour as US stocks trade at a loss. The US Department of Labor revealed that November non-farm payrolls had risen by 263,000, above estimates of 200,000, but below the previously revised 284,000 in the previous month, putting pressure on the Federal Reserve (Fed). Going deeper into the data, the Unemployment Rate remained around 3.7%, but wages increased. Median Hourly Earnings increased 5.1% year-on-year, up from 4.9% in October, adding to inflationary pressures.

Notably, the jobs report would keep the Federal Reserve on track to continue tightening monetary policy, even if it means doing so to a lesser extent, as Federal Reserve Chairman Jerome Powell stated on Wednesday.

The Federal Reserve’s decision to moderate increases was further justified by a weaker report from the Institute for Supply Management (ISM) manufacturing PMI for November. The index dipped into contraction territory at 49.0, but also portrayed deteriorating conditions. The data reignited recession fears as the US central bank continues to tighten policy. In fact, the Federal Reserve is trying to slow down the economy, reporting below-trend growth, as Fed Chairman Powell had said.

Meanwhile, after recovering 105,000, the Dollar Index (DXY) lost 0.12% to 104,610, contrary to US Treasury yields. The 10-year US Treasury yield traded at 3.559%, up five basis points, bolstered by traders resetting the Federal Funds Rate (FFR) ceiling at 4.94%.

What must be considered

Next week, the US economic calendar will include the ISM Non-Manufacturing PMI, Initial Jobless Claims, the Producer Price Index (PPI) and the preliminary release of University of Michigan Consumer Sentiment (UoM).

Silver Price Forecast: XAG/USD Technical Outlook

The daily chart shows that XAG/USD reached new all-time highs during the London session. The white metal tumbled, but buyers smashed through daily lows and lifted XAG/USD towards $23.22. Oscillators led by the Relative Strength Index (RSI) preliminary indicate that Silver is overbought, although the 9-Day Rate of Change (RoC) shows that buyers are still in command. Therefore, the XAG/USD bias is bullish.

XAG/USD key resistance levels lie at $24.00, followed by $25.00, ahead of the February 2022 high at $25.61.