Silver Price Forecast: XAG/USD struggles to extend upside above $66.25, NFP data awaited

Silver price (XAG/USD) struggles to extend its Wednesday recovery above $66.25 during Thursday's European trading session. Investors are awaiting the United States Nonfarm Payrolls (NFP) data for August, which will be released on Friday. TD Securities expects August NFP to rebound to 95k after a July decline of 23k, though risks to forecasts appear hawkish and could result in an outsized positive surprise.

The unemployment rate is projected to remain steady at 4.1%, with limited change. Market attention will focus on US NFP as it influences expectations for the Federal Reserve's monetary policy. Analysts at TD believe a modestly hawkish employment report will reaffirm the Fed's focus on inflation but will not likely prompt hikes, as they expect inflation data to allow the Fed to keep rates on hold.

Higher oil prices due to restricted energy shipments through the Strait of Hormuz may hinder the Silver price recovery, as higher oil prices increase global inflation expectations and fears of interest rate hikes. The daily chart shows XAG/USD trading at $66.00, above the 20-day Exponential Moving Average ($65.51), with a near-term bias in favor of price extension.

The Relative Strength Index (14) is neutral but leaning higher, indicating buyers still have the upper hand. Support is at the 20-day EMA ($65.51), while the August high near $71 is a potential barrier. Silver is a precious metal used as a store of value and a medium of exchange, often turned to by investors for portfolio diversification or as a hedge during high-inflation periods.

Factors such as geopolitical instability, interest rates, commodity demand, industrial usage, and economic dynamics in major economies can impact Silver prices.