- Silver struggles to capitalize on its gains registered over the past two days.
- A bearish USD could support the commodity as traders await the US NFP.
- The mixed technical setup warrants caution for aggressive bullish traders.
Silver (XAG/USD) edges lower during the Asian session on Friday, snapping a two-day winning streak to the weekly high set the previous day. The white metal, however, lacks bearish conviction and currently trades below the $67.00 mark, down 0.30% for the day, as traders await the release of the closely watched US Nonfarm Payrolls (NFP) report.
Heading into the key data risk, receding bets for an interest rate hike by the US Federal Reserve (Fed) in September and sliding US bond yields keep the US Dollar (USD) near its lowest level in over a week. This, in turn, is seen as a key factor acting as a tailwind for USD-denominated commodities, including the XAG/USD. That said, the technical setup warrants some caution for bullish traders and positioning for an extension of this week’s goodish rebound from the $63.30 area.
The XAG/USD trades below the 200-day Simple Moving Average (SMA) at $72.84 and the mid-range Fibonacci retracement level of the May-July decline. Moreover, mixed technical momentum indicators suggest that rallies remain capped for now. In fact, the Relative Strength Index hovers in the mid-50s and the Moving Average Convergence Divergence (MACD) slips into negative territory, hinting at waning upside pressure and validating the near-term cautious outlook.
On the topside, immediate resistance emerges at the 38.2% retracement at $67.83, followed by a more significant barrier at the 50.0% retracement at $71.89 and the 200-day SMA at $72.84. A sustained strength above this cluster would be needed to ease the broader downside bias and expose the 61.8% level near $75.95. On the downside, initial support is seen at the 23.6% Fibo. level at $62.81, with a deeper floor at the prior cycle low around the 0.0% retracement at $54.69, where buyers would be expected to re-emerge if selling accelerates.
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