Silver Price Forecast: XAG/USD rallies to $31 as US labor market strength eases in June

• Silver price jumps to near $31.00 as US yields decline after weak US NFP report.
• The payrolls data beats estimate but remain below May’s reading.
• Silver price strengthens after a Falling Channel breakout.

Silver price (XAG/USD) posts a fresh three-week high near $31.00 in Friday’s American session. The white metal strengthens as US bond yields weaken after the United States (US) Nonfarm Payrolls (NFP) report for June showed that the labor market lost momentum.

The Unemployment Rate rose to 4.1% from the estimates and the prior release of 4.0%. The number of individuals hired by employers came in higher at 206K from estimates of 190K but lower than the prior release of 218K, downwardly revised from 272K.

Also, Average Hourly Earnings declined expectedly in June. On month and annual basis, Average Hourly Earnings grew at a slower pace of 0.3% and 3.9%, respectively.

Soft wage data, downwardly revised payrolls and further rise in the jobless rate suggests that strength in the labor market conditions has eased further. This would boost expectations of early rate cuts by the Federal Reserve (Fed). Currently, market participants expect that the Fed will start reducing interest rates from September.

10-year US Treasury yields fall to near 4.3%. A decline in yields on interest-bearing assets reduces the opportunity cost of holding an investment in non-yielding assets, such as Silver.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, remains in the bearish trajectory around 105.00.

Silver technical analysis

Silver price strengthens after a breakout of the Falling Channel formation on a four-hour timeframe. An upside break of the above-mentioned chart pattern results in a bullish reversal. A bull cross, represented by 20-and 50-day Exponential Moving Averages (EMAs) at $29.30, exhibits a bullish trend.

The 14-period Relative Strength Index (RSI) shifts into the bullish range of 60.00-80.00, indicating that momentum has shifted to the upside.

Silver four-hour chart