Silver Price Forecast: XAG/USD reaches three-month highs above $21.00 on a risk-on impulse

• Silver price clears the $21.00 mark, courtesy of broad US dollar weakness amidst falling US bond yields.
• Speculations that the Fed would tighten at a slower pace spurred the equities recovery since Monday.
• US factory orders remained unchanged, while job openings, fell.

Silver price continues to extend its recovery during the week, climbing above the $21.00 figure for the first time since June 2022, spurred by a soft US dollar and falling US Treasury bond yields. At the time of writing, XAG/USD is trading at $21.02, up by 1.66%, as the North American session progresses.

US equities are trading in the green, signaling investors appetite improving. The greenback remains heavy due to speculations that the Fed might tighten at a slower pace of increases after a reading of US manufacturing activity flashed signs of tempering.

That said, the US Dollar Index, a gauge of the buck’s value vs. a basket of peers, creeps lower by 1.14%, at 110.389, undermined by US Treasury bond yields. The US 10-year benchmark note rate coupon is down two bps at 3.619%.

Data-wise, the US economic docket featured factory orders for August, reported by the US Commerce Department. Figures came at 0%, after July’s reading of -1%. Meanwhile, the US Labor Department revealed that job openings in the US dropped, though they remained at higher levels. The US JOLTs report for August showed that vacancies dropped from 11.239M in July to 10.053M in August.

In the meantime, Fed policymakers continued to grab the headlines as Fed Williams, Barkin, Jefferson, and Daly crossed wires.

New York Fed President John Williams said that the Fed’s “job is not yet done” while adding that rates are “not yet in a restrictive place for growth.” Richmond’s Fed Barkin said that a strong dollar has potential spillover effects on the global economy but stressed that the Fed is focused on the US economy.

San Francisco Fed Mary Daly said that further rates are needed, and then the Fed needs to hold restrictive policies in place until “we are truly done” on reaching the Fed’s goal. Earlier in his first remarks, Philip Jefferson said that inflation is the most serious problem facing the Fed. He added, “Restoring price stability may take some time and will likely entail a period of below-trend growth.”

What to watch

The US economic docket will feature the ADP Employment change, alongside the US International Trade and the S&P Global Services and Composite PMIs for September.

Silver (XAG/USD) Key Technical Levels