Silver prices edged higher during Asian trading on Thursday, recovering some ground after a sharp sell-off, as market participants balanced geopolitical risks with upcoming US labor market data. Spot silver gained 1.2% to trade near $73.60, with XAG/USD quoted around $73.35 at the time of reporting. The rebound offered a reprieve from recent selling pressure, but the broader tone remained cautious as prices stayed below key technical levels.
Geopolitical Risks and Iran Blockade Concerns
Geopolitical tensions remain a key driver for precious metals. On Wednesday, President Donald Trump indicated in an interview with The New York Post's 'Pod Force One' that a US maritime blockade of Iranian sea ports 'could last until Labor Day,' though he added that he did not expect that outcome. If the blockade continues until September 7, it would signal a prolonged period of tension with no durable resolution. Continued restrictions around Iranian ports could also raise concerns about energy flows through the Strait of Hormuz, a critical route for global oil shipments.
This risk has complicated the outlook for silver. While precious metals can benefit from safe-haven demand during geopolitical stress, silver has underperformed since the start of the Middle East conflict as higher oil prices fueled inflation concerns. Those pressures have shifted how traders view the Federal Reserve's policy path. Before the conflict, markets had anticipated two US interest rate cuts. Since then, higher energy prices and inflation risks have encouraged investors to price in a more hawkish stance from the central bank.
For silver, that is a headwind. The metal does not offer a yield, making it more vulnerable when interest rates remain elevated or when traders expect borrowing costs to stay higher for longer. For more on related geopolitical impacts, see Failed US-Iran Talks Threaten Ceasefire, Fueling Brent Crude Rebound Prospects.
US Jobs Data Takes Center Stage
Economic data is also shaping the near-term outlook. The May ADP Employment Change showed 122,000 jobs were added in the US private sector, above expectations for 117,000 and the previous reading of 105,000. The stronger figure set a firmer tone before Friday's Nonfarm Payrolls report, which is likely to be closely watched by traders seeking clues on the Fed's next move.
A resilient labor market could strengthen the case for the central bank to keep rates elevated, particularly if policymakers remain concerned about inflation risks linked to higher energy costs. That would likely weigh on silver by supporting the dollar and keeping real yields firm. A weaker-than-expected payrolls reading, however, could ease some of those concerns and offer support to precious metals.
Technical Picture Remains Fragile
Despite Thursday's rebound, silver's technical setup remains under pressure. XAG/USD is still trading below its 20-day Exponential Moving Average at $76.02, a level that traders are likely to watch closely for signs of a stronger recovery. The Relative Strength Index is near 43, below the neutral 50 line, suggesting that selling pressure has eased but has not yet given way to a clear bullish reversal.
A sustained move above the 20-day EMA at $76.02 would help ease the near-term bearish bias and could open the way towards the May 25 high of $78.83. On the downside, a decisive break below the May 28 low of $71.79 would expose the April 7 low of $68.28, signaling that sellers remain in control.
For broader market context, see Dow Surges 686 Points on Ceasefire Progress, S&P 500 and Nasdaq Extend Record Runs and IEA Warns Middle East Energy Production Recovery Could Extend to Two Years.
This article is for informational purposes only and does not constitute financial advice.
