Silver rebounds above $64 as weak US jobs data challenges hawkish Fed bets

Silver (XAG/USD) experienced a rebound on Wednesday, trading around $64.30, marking a 0.32% increase for the day. The precious metal found some support from unexpectedly weak US employment data, though higher US Treasury yields and a tight monetary policy outlook continued to hinder its upside potential. The latest labor-market figures provided a slight reprieve for Silver, as the ADP Employment Change report revealed that the US private sector added 38K jobs in August, falling short of the anticipated 47K.

This downbeat reading contributed to signs of cooling labor demand, potentially complicating arguments for additional monetary tightening. However, expectations surrounding the Federal Reserve (Fed) remained predominantly hawkish, with the CME FedWatch tool indicating a 64% probability of a rate hike during the September 15-16 meeting, up from 36% just a week prior.

Elevated rate expectations have driven US Treasury yields significantly higher, reaching 4.81% on Wednesday, the highest level since 2023, and presenting a substantial headwind for Silver as a non-yielding asset. Meanwhile, rising tensions in the Middle East have propelled Oil prices upward, adding another layer of uncertainty to the inflation outlook.

Persistent energy-driven price pressures may encourage the Fed to maintain a restrictive stance for an extended period, potentially keeping Treasury yields elevated and limiting demand for precious metals. The US Dollar (USD) remained bolstered by expectations of higher interest rates, although disappointing employment figures prevented the Greenback from gaining significant momentum.

Consequently, Silver's rebound remained a delicate balance between weakening US labor-market signals and persistent expectations of tighter Fed policy. Investors now turned their focus to Friday's Nonfarm Payrolls (NFP) report, which could offer further insights into the US labor market's strength and reshape expectations for the Fed's September decision.

As of the one-hour chart, XAG/USD traded at $64.36, retaining a bearish near-term outlook as it remained below both the 100-hour simple moving average ($66.81) and the 200-hour SMA ($67.80). This configuration suggests that the recent bounce was a correction within a broader downtrend, with the cluster of moving averages above price reinforcing the ceiling on recovery attempts.

The Relative Strength Index (RSI) at 48.75 hovered just below the neutral line, indicating easing downside pressure but not yet signaling a definitive shift in momentum. On the upside, immediate resistance is positioned at $66.70, followed by the horizontal barrier at $67.50, alongside the 100-hour SMA ($66.81) and the 200-hour SMA ($67.80), which would provide additional support if bulls attempt a stronger rebound; sustained movement above these levels would be necessary to dispel the current bearish bias and expose the higher resistance at $71.12.

Conversely, initial support can be found at $63.32, with further safeguards at $62.19 and $60.87, where buyers would likely aim to either slow or halt any further decline.