Silver Price Forecast: XAG/USD trades flat around $66.60 ahead of US data

On Tuesday, silver prices (XAG/USD) remained flat around $66.67 during the Asian trading session. Traders were waiting for US economic data, specifically the ISM Manufacturing PMI data for August and the JOLTS Job Openings data for July, both scheduled to be released at 14:00 GMT. The ISM Manufacturing PMI was anticipated to release at 55.2, a decrease from 55.6 in July.

Similarly, the JOLTS Job Openings data was expected to show a marginal decline in new jobs posted by US employers, from 7.359 million in June to 7.3 million. The influence of this data on Federal Reserve (Fed) interest rate expectations was significant. Financial market experts believed that the August batch of Nonfarm Payrolls (NFP) and the Consumer Price Index (CPI) would greatly impact the Fed's rate decisions.

Rabobank's Elwin de Groot suggested that Fed Chair Kevin Warsh's appearance at the Jackson Hole event was aimed at shifting expectations before the September meeting. De Groot believed Warsh's remarks aimed to elevate rate-hike expectations, moving the September debate towards hawkish perspectives and restoring his credibility in fighting inflation after July's perceived inaction.

Nevertheless, Rabobank cautioned that this approach presented a challenging balancing act, as the White House might oppose a rate hike so close to the November midterms. Nevertheless, de Groot emphasized that Warsh had sent an important signal, indicating that the Fed was prepared to tighten monetary policy further if inflation failed to subside.

Geopolitical factors such as the Middle East war and rising oil prices, which reached near $85.85 in the Asian session, posed a potential headwind for silver. Higher energy prices sparked concerns about mounting global inflation expectations, which could compel investors to increase their bets on hawkish central banks' policies.

This situation was detrimental to non-yielding assets like silver. In the daily chart, XAG/USD traded at $66.59, with a bullish near-term bias as it rose above the 20-day exponential moving average ($65.71), acting as underlying support. The Relative Strength Index (RSI) at 55.05 indicated a steady, rather than aggressive, buying pressure as the price consolidated above its short-term trend marker.

Support could be found at the 20-day EMA ($65.71), while the August 9 low at $62.19 served as the next major cushion. Should silver break above the June 17 high at $71.56, it could extend its upward trend. Silver, a precious metal oft traded by investors, has historically served as a store of value and medium of exchange. Although less favored than gold, silver could diversify investment portfolios due to its intrinsic value or as a potential hedge during periods of high inflation.

Investors could purchase physical silver, such as coins or bars, or trade it via Exchange Traded Funds that track its price in international markets. Silver prices fluctuate due to various factors, including geopolitical instability, recession fears, its status as a safe-haven asset, lower interest rates, US Dollar behavior, investment demand, mining supply, and recycling rates.

As an industrial metal used in electronics, solar energy, and other sectors, silver demand could also impact prices. The Gold/Silver ratio, showing the number of silver ounces needed to equal one gold ounce, might help investors assess the relative valuation of both metals.