Silver bounced back after early losses, closing above $36.50 following the Nonfarm Payrolls report. This report revealed that the US economy added only 73,000 jobs, falling short of the 110,000 forecast. Additionally, June’s payrolls were revised down, and the unemployment rate climbed to 4.2%. These numbers increased speculation that the Federal Reserve might cut rates in September. The weaker data led to a sell-off of the US Dollar, which boosted demand for silver. Falling US Treasury yields further supported this move, raising market expectations for a Fed rate cut to 82%. The S&P Global Manufacturing PMI slightly increased to 49.8, while the ISM Manufacturing PMI dropped to 48.0, indicating ongoing challenges in the industrial sector. Technically, silver found support at the 50-day EMA but is still below a broken ascending channel. The Relative Strength Index showed a slight improvement but remains below 50, indicating a cautious outlook. If silver recovers, resistance could be in the $37.50-$38.00 range. However, a drop below $36.00 may lead to renewed downward pressure. Various factors influence silver prices, including geopolitical instability and interest rates. Silver often follows gold due to their similar roles in investment. Demand from industries and currency fluctuations also play essential roles. Silver is utilized in sectors like electronics and solar power, with industrial activity in the US, China, and India significantly affecting its price. Today’s weak jobs report has shifted our immediate focus. With the US adding far fewer jobs than expected and a rise in unemployment, the market is pricing in an 82% chance of a Federal Reserve rate cut in September. This development has caused the US Dollar Index to fall below the critical 103 level, creating a favorable environment for silver. For derivative traders, we recommend a cautiously bullish stance in the coming weeks. We are considering buying call options with strike prices targeting the $37.50 to $38.00 range to leverage potential upward momentum. This strategy helps limit our downside risk if the recent bounce from the 50-day EMA turns out to be temporary. This situation brings to mind late 2023, when the market began to anticipate rate cuts for 2024. During that time, silver prices rose significantly in the weeks leading up to the new year, driven by speculation rather than actual policy changes. We may be witnessing the start of a similar trend right now. Besides monetary policy, industrial demand provides a mixed but solid foundation for silver’s price. Recent data shows that global solar panel installations are on track to set a new yearly record in 2025, which will continue to absorb physical supply. However, the ISM Manufacturing PMI’s drop to 48.0 suggests that other industrial applications could struggle. Our main risk arises if Federal Reserve officials downplay the likelihood of an imminent rate cut, which could reverse the dollar’s and yields’ recent trends. We need to monitor the $36.00 price level as our critical support. A break below this level would indicate that the rally has lost momentum and would signal us to reassess our bullish positions.

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