Silver Price Forecast: XAG/USD depreciates to near $26.50 ahead of US NFP

• Silver price faced challenges as traders adopt caution ahead of US Nonfarm Payrolls due on Friday.
• A softer US NFP report could support the Fed's adopting a less hawkish stance on its rate trajectory.
• Egypt has taken the lead in revitalizing stalled peace between Israel and Hamas, undermining the safe-haven Silver.

Silver price snaps its two-day winning streak, trading around $26.50 per troy ounce during the European session on Friday. The prices of the white metal faced challenges as traders exercised caution ahead of the Nonfarm Payrolls (NFP) data from the United States (US) due later in the day. The US NFP report is expected to print a reading of 243K for April, compared to 303K prior, which could offer support for the Federal Reserve’s (Fed) stance to be less hawkish on interest rate policy.

On Thursday, the report of the US Initial Jobless Claims indicated that the number of Americans filing new claims for unemployment benefits for the week ending April 26, showed no change from the previous week. It remained at 208K, the lowest level in two months and significantly below market expectations of 212K. This could give the Federal Reserve flexibility to delay interest rate cuts. The higher interest rates for a longer period could dampen the demand for non-yielding assets like Silver.

The US Federal Reserve kept interest rates unchanged at 5.25-5.50% on Wednesday, signaling a continued inclination toward future rate cuts. The downside for the Silver price remains limited in the wake of the prevalent US Dollar (USD) selling bias, led by Fed Chair Jerome Powell's less hawkish remarks. Powell dismissed any further interest rate hike during the FOMC conference after the policy decision. This, in turn, acted as a tailwind for the Silver price.

In the Middle East, the decreasing geopolitical tensions are weighing on safe-haven Silver, fueled by hopes for a ceasefire deal between Israel and Hamas. Egypt has taken the lead in revitalizing stalled peace talks this week, supported by US Secretary of State Antony Blinken's call for Hamas to accept Israel's ceasefire proposal in exchange for the release of hostages.