• Silver prices surge 7% to hit three-week highs near $21.00.
• The US dollar falls as US labor markets show signs of easing.
• XAGUSD has reached an important resistance level at $20.90.

Silver prices skyrocketed on Friday, propelled by a weak US dollar, following a mixed US Non-Farm Payrolls report. The precious metal appreciated about 7% on the day, breaking beyond the top of the last two weeks' trading range, around $20, to hit three-week highs at $20.80 so far.

The US dollar dives as the labor market show signs of easing

The release of the US Non-Farm Payrolls report sent the US dollar tumbling earlier today. Non-Private payrolls increased to 261K in October, beating expectations of a 200K rise, and September’s figures have been revised up to 315K from the 264K initially estimated.

On the other hand, the unemployment rate has increased to 3.7% from 3.5% in September and wage inflation slowed down to 4.7% from 5% over the previous month. These figures suggest that labor market conditions might be easing, which brings the possibility of a dovish pivot in December back to the table.

XAGUSD approaching resistance at $20.95

From a technical point of view, silver is now right below an important resistance area at $20.90, where October 6 and 7 highs meet the 38,2% Fibonacci Retracement of the April – September decline.

With the pair now reaching overbought levels in hourly and daily charts, the possibility of a moderate pullback before further rally should be contemplated.

On the Upside, above $20.90, the next potential targets are October 4 high at $21.25 and. The 200-day SMA at 21.55.

On the downside, the intra-day level at $20.55 is holding bears for the time being, with the next potential targets at $20.00 previous resistance, and the 50-day SMA at $19.20.

XAGUSD daily chart

Technical levels to watch