Silver Price Forecast Summary
In the latest analysis, silver prices are currently testing a pivotal resistance level at $36.30 for the seventh consecutive session. A successful breakout above this level could lead to a rally towards $36.84, which is the next minor resistance, and potentially challenge the 13-year high at $37.32.
Market Influences
Traders are closely monitoring the upcoming June ADP employment report, as weak labor data could bolster expectations for Federal Reserve rate cuts, which would likely weaken the US dollar and support a rally in silver prices. Despite an increase in job openings, recent hiring declines indicate a slowing labor market, which may align with a cautiously bullish outlook for silver if the ADP report underperforms.
Treasury Yields and Debt Concerns
The recent passage of a tax and spending bill has added $3.3 trillion to the national debt, pushing the 10-year Treasury yield to 4.251% and the 2-year yield to approximately 3.779%. This situation highlights the tension between inflation concerns and the Fed's cautious approach to tightening monetary policy. While higher yields typically exert downward pressure on metals, the persistent deficit and the Fed's reluctance to act aggressively are providing underlying support for both gold and silver as traders seek to hedge against inflation risks.
Inflation Signals
Recent ISM manufacturing data indicates a contraction at 49.0, yet price pressures remain persistent, with the prices paid index slightly rising to 69.7. This suggests that inflation is still a concern, limiting the Fed's flexibility and keeping real yields contained. Such conditions create a supportive environment for metals, aiding silver's ability to maintain higher support levels.
Outlook for Silver
The outlook for silver remains cautiously optimistic, with a potential breakout above $36.30 opening the door to $36.84 and possibly the psychological level of $37.32. Conversely, if silver fails to break this resistance, it may retreat to the support range between $35.40 and $34.87, with the 50-day moving average at $34.30 serving as a potential buy zone. The near-term direction of silver prices is likely to be influenced by the upcoming ADP employment report and the Fed's evolving stance on interest rates. A weaker labor print could serve as the catalyst for a bullish move in silver.
Conclusion
Overall, silver is positioned for a potential breakout, with market dynamics heavily influenced by labor market data and Federal Reserve policy. Traders are advised to stay alert to these developments as they could significantly impact silver's price trajectory in the near term.