Silver Price Forecast: XAG/USD extends gains as US Dollar falls further, NFP comes into focus

Silver price (XAG/USD) continues its upward trend on Thursday, climbing by 0.67% to approximately $65.70 in the European trading session. The increase in value is attributed to the declining US Dollar (USD), driven by moderate job demand in the US private sector. At the time of this report, the US Dollar Index (DXY) is hovering near its lowest point of the day, at 99.45.

The US ADP reported the creation of 38K private sector jobs in August, slightly below the estimated 47K and the previous 46K release. This situation creates an unfavorable environment for the Nonfarm Payrolls (NFP) data, scheduled to be released on Friday. A weaker US Dollar makes Silver a more appealing option for investors seeking a risk-reward scenario.

Meanwhile, the lack of progress in US Treasury Yields has provided some support to non-yielding assets like Silver. The 10-year US Treasury Yields have stabilized near 4.77%, after hitting a fresh high of 4.82% earlier in the week. In the daily chart, XAG/USD is currently trading at $65.92 and is above the 20-day Exponential Moving Average (EMA) of $65.50, suggesting a positive near-term bias as the price maintains support.

The Relative Strength Index (14) at 52.85 indicates neutral-to-positive bullish momentum, after its latest advance. Silver is a precious metal that has been traded among investors for centuries, serving as a store of value and a medium of exchange. Although less popular than Gold, Silver may be an attractive option for diversifying investment portfolios, considering its intrinsic value or as a potential hedge during high-inflation periods.

Investors can acquire physical Silver, such as coins or bars, or trade it through Exchange Traded Funds that track its price on international markets. Silver prices can fluctuate due to various factors, including geopolitical instability, recession fears, and the Gold/Silver ratio. Geopolitical tensions or concerns of a deep recession may cause Silver prices to rise due to its safe-haven status, albeit to a lesser extent than Gold's.

As a yieldless asset, Silver is inclined to rise with lower interest rates. Silver's movements also depend on the behavior of the US Dollar (USD) since it is priced in dollars (XAG/USD). A stronger Dollar tends to keep Silver prices stable, while a weaker Dollar is likely to boost Silver prices. Other factors, such as investment demand, mining supply, and recycling rates, can also influence Silver prices.

Silver is widely utilized in industries like electronics and solar energy due to its high electric conductivity, which exceeds that of Copper and Gold. A surge in demand can lead to increased Silver prices, while a decline in demand tends to lower them. Geopolitical and economic dynamics in countries like the US, China, and India also contribute to price fluctuations.

Silver prices tend to mirror Gold's movements, as both are considered safe-haven assets. The Gold/Silver ratio, indicating the number of ounces of Silver required to match the value of one ounce of Gold, can help determine the relative valuation of both metals. Some investors may perceive a high ratio as an indicator that Silver is undervalued, or Gold is overvalued, whereas a low ratio may suggest that Gold is undervalued relative to Silver.