Silver Price Forecast: XAG/USD rallies to near $29 as Fed deeper rate cut bets swell

• Silver price jumps sharply to near $29.00 as the Fed is expected to deliver a bigger interest rate cut this month.
• Weak private sector employment data weighs on the US Dollar and bond yields.
• Investors await the US NFP data for August, which will be published on Friday.

Silver price (XAG/USD) delivers a vertical upside move to near $29.00 in Thursday’s North American session. The white metal witnesses a strong buying interest as surprisingly weak United States (US) ADP Employment Change data for August renewed fears of deteriorating labor market conditions.

The private employment data that came in the early American session showed that fresh payrolls were lower at 99K than the downwardly revised figure of 111K from 122K in July. Economists estimated fresh private payrolls to have increased to 145K.

Weak private sector employment data has prompted market speculation that the Federal Reserve (Fed) will start the policy-easing cycle this month aggressively. Signs of slowing labor market demand have weighed heavily on the US Dollar (USD) and bond yields.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, declines to near 101.00. 10-year US Treasury yields plunge to near 3.73%. Lower yields on interest-bearing assets strengthen the appeal of non-yielding assets, such as Silver, given that they reduce the opportunity cost of holding investment in them.

Going forward, the US Nonfarm Payrolls (NFP) data for August will be keenly watched, which will be published on Friday. Meanwhile, investors await the US ISM Services PMI data for August, which will be published at 14:00 GMT.

Silver technical analysis

Silver price trades in a Channel formation on a daily timeframe, which is slightly sloping downwards. The asset recovers sharply and attempts to break above the 20-day Exponential Moving Average (EMA), which trades around $28.80.

The 14-day Relative Strength Index (RSI) oscillates inside the 40.00-60.00 range, suggesting a consolidation ahead.

Silver daily chart