Precious metals continue to rebound. Silver is up nearly 4%, while gold continues to advance, reaching its highest level since late June. Over the past three trading sessions, gold has climbed by almost $200, approaching $4,300 per ounce. The rally has been supported by weaker US labour market data, the relative weakness of the US dollar, and growing expectations of an agreement to reopen the Strait of Hormuz, potentially leading to a de-escalation of tensions in the Middle East. Despite the strong recovery in sentiment, both silver and gold remain well below the record highs reached earlier this year.
Oil prices have fallen nearly 5% this week, providing an additional tailwind for silver. However, the prospect of a lasting agreement on reopening the Strait of Hormuz remains uncertain. Investors are now awaiting the release of the US July Nonfarm Payrolls (NFP) report at 1:30 PM GMT. The report is expected to provide important clues regarding the future path of US interest rates and could trigger elevated volatility in both gold and silver. A weaker-than-expected NFP reading would likely support precious metals, while stronger-than-expected data (the market expects payroll growth of 80,000 following 57,000 in June) could prompt short-term profit-taking after the sharp rally seen in recent days.
- The weaker-than-expected July ADP employment report reduced expectations of a Federal Reserve rate hike in September, supporting precious metals, although the overall US economic backdrop remains solid.
- The global economy continues to expand at around 3% year-over-year and remains far from recession, providing support for silver, which also benefits from its growing role in AI-related data centre infrastructure.
- The US Dollar Index (DXY) is edging higher today but remains close to six-week lows around 99.8 after its sharp decline since July 25, continuing to enhance the relative attractiveness of precious metals.
- Additional support comes from reports of progress in talks between Iran and Oman regarding the reopening of the Strait of Hormuz, although the broader geopolitical situation in the Middle East remains highly unstable.
SILVER and GOLD chart (D1 timeframe)
Silver has already rebounded by around 20% from its recent local lows and is currently testing a key resistance level represented by the 50-day exponential moving average (EMA50, orange line). A break above this level would mark the first move above the EMA50 since May. The next major resistance zone lies between $68 and $71 per ounce, where the 200-day EMA (red line) converges with the 23.6% Fibonacci retracement of the January-February decline. On the downside, $58 per ounce remains the key support level.
Source: xStation5
Source: xStation5
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