Silver Price Forecast: XAG/USD tumbles below $32 on blowout US jobs data

• Silver price falls sharply below $32.00 as US bond yields rise further.
• Surprisingly upbeat US NFP data forced traders to pare Fed large rate cut bets.
• Middle East tensions are expected to offer support to the Silver price.

Silver price (XAG/USD) extends its downside below $32.00 in Monday’s European session. The white metal weakens as the US bond yields rise further, given that the likelihood of the Federal Reserve (Fed) delivering another larger-than-usual 50 basis points (bps) interest rate cut in November has gone off the table.

10-year US Treasury yields jump slightly above 4%. Higher yields on interest-bearing assets reduce 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, clings to gains near 102.50.

However, the Silver is unlikely to turn extremely bearish amid growing tensions between Iran and Israel. Historically, geopolitical tensions improve demand for precious metals as a safe haven.

Market speculation for Fed large rate cuts waned after the United States (US) employment report for September showed strong labor demand and robust wage growth. Traders are pricing a Fed 25 bps interest rate cut in November, according to the CME FedWatch tool.

Upbeat labor market data has diminished fears of an economic slowdown, which forced traders to be bet for a second consecutive 50 bps interest rate cut in September.

Going forward, the next move in the Silver price will be influenced by the US Consumer Price Index (CPI) data for September, which will be published on Thursday. Economists expect the core CPI – which excludes volatile food and energy prices – to have grown steadily by 3.2%.

Silver technical analysis

Silver price continues to face pressure near the horizontal resistance plotted from the May 20 high of $32.50 on a daily timeframe. The white metal strives for more upside as the outlook is upbeat due to upward-sloping 20 and 50-day Exponential Moving Averages (EMAs), which trade around $31.00 and $30.00, respectively.

The 14-day Relative Strength Index (RSI) remains in the bullish range of 60.00-80.00, suggesting more upside ahead.

Silver daily chart