Silver (XAGUSD) Slips as Oil Surge and High Yields Weigh on Precious Metals

Key Takeaways

• XAGUSD fell 1.1% to $60.697 from an intraday high of $61.491, trading close to its session low of $60.677.
• Rising oil prices, with Brent above $101 per barrel, keep inflation risks in focus as Middle East supply concerns persist.
• The 10-year US Treasury yield remains elevated at around 5.3%, raising the opportunity cost of holding non-yielding precious metals.
• September payrolls added only 29,000 jobs, cutting the market-implied probability of an October Fed rate increase to roughly 16%, from 70% a week earlier.

XAGUSD advanced towards the $60.95–$61.00 area early in the session before momentum reversed, leaving price near the bottom of its daily range.

The move reflects a tug-of-war between softer expectations for Fed tightening and renewed inflation pressure from energy markets. Traders are now assessing whether selling momentum can extend or whether buyers can defend the current support zone.

Why Traders Are Watching Silver

Inflation and rate expectations remain the biggest market drivers. US employment growth slowed sharply in September, and earlier payroll figures were revised lower. Weaker labour data would normally support precious metals by reducing the likelihood of further rate hikes.

However, high yields and surging oil prices are offsetting that support, making silver less attractive. The Fed's latest meeting minutes are the next major catalyst for interest-rate expectations and the US dollar.

Key factors influencing silver include:

• Oil prices: Brent above $101 is keeping inflation a major risk factor.
• Treasury yields: A 10-year yield near 5.3% increases the opportunity cost of holding silver.
• Fed expectations: Weak payrolls have reduced the odds of an October hike.
• US dollar: Fed minutes could strengthen or weaken the dollar, directly affecting silver's recovery prospects.

Key Trading Levels

XAGUSD initially climbed towards $60.95–$61.00 before forming a series of lower highs and lower lows, with selling accelerating after the break below $60.85. Attempts to recover towards $60.80 were rejected, and price slipped to $60.70. The latest candles show selling momentum stabilising near $60.68–$60.70.

The first technical test is whether price can hold above $60.70. Holding this area could allow silver to stabilise and attempt another recovery towards $60.80, particularly if price moves back above the 9-period moving average and forms higher short-term highs.

On the downside, a sustained break below the session low at $60.677 would confirm further deterioration in the short-term structure and could expose $60.60. On the upside, a move above $60.90 would weaken the current bearish sequence and reopen a test of $61.00.

Silver Prediction: What's Next?

Silver could remain under pressure if oil prices continue climbing, stoking inflation concerns, keeping Treasury yields elevated and encouraging markets to price in additional Fed tightening this year. A stronger US dollar could make recovery more difficult, particularly if the Fed minutes show support for maintaining restrictive policy.

However, silver could move higher if policymakers move cautiously following the weaker labour-market data. Reduced expectations for further rate increases could pull Treasury yields and the dollar lower, improving conditions for precious metals.

For a deeper analysis of silver's technical levels, catalysts and potential scenarios, read the full article here.