Silver Recovers but Faces Resistance Amid Bearish Trend
Silver (XAG/USD) is showing signs of recovery on Monday, trading above $61.30 after hitting two-month lows around $59.70 on Friday. The precious metal has benefited from a slight pullback in US Treasury yields following softer-than-expected US labor data released on Friday. However, it remains below a critical resistance level at $62.40, maintaining the broader bearish trend.
The Nonfarm Payrolls report released on Friday indicated a significant slowdown in US employment creation in September, with an unexpected rise in the Unemployment rate. These figures suggest that the Federal Reserve (Fed) may pause its monetary tightening cycle in October, which has temporarily eased pressure on precious metals like silver. However, global borrowing costs are surging due to high oil prices, which could keep inflationary pressures elevated and limit any significant rally in silver prices.
Technical analysis indicates that silver is recovering mildly but remains below a key resistance area around $62.40, which is also the neckline of an extended Head & Shoulders pattern. Momentum indicators in the 4-hour chart are neutral, with the Relative Strength Index (14) around the 50 midline and the Moving Average Convergence Divergence (MACD) slightly positive. A break above $62.40 would expose the September 25 high near $65.00, followed by resistance around $68.00. On the downside, bearish attempts could test Friday's lows at $59.69 before reaching the late August and early September lows at $56.60.