Silver Price Analysis: XAG/USD remains choppy around $21.00 despite weak US job data
- Silver price remains directionless despite the US ADP has reported soft labor market data.
- In September, fresh payrolls halved to 89K, against August’s reading of 180k.
- Silver price delivered a breakdown of the H&S chart pattern, which resulted in a vertical sell-off.
Silver price (XAG/USD) continues to trade sideways near $21.00 as the United States Automatic Data Processing (ADP) has reported that new private payrolls in September were almost half of the additions in August. Fresh payrolls were 89K, significantly lower than expectations of 153k and the former reading of 180k.
The labor market data for September carries less importance as the next monetary policy meeting by the Federal Reserve (Fed) is scheduled for November and October job data will be keenly watched by policymakers. But is expected to vanish odds for one more interest rate hike.
While Cleveland Fed Bank President Loretta Mester favored one more interest rate hike in the remainder of 2023 this week as the US economy has been resilient on the grounds of labor market and consumer spending. Also, a significant improvement in Manufacturing PMI for September has strengthened the outlook.
The US Dollar Index (DXY) corrects sharply to near 106.60 from an 11-month high of 107.20 and is expected to remain volatile as the US Institute of Supply Management (ISM) Services PMI for September is due at 14:00 GMT. The US ISM is expected to report the Services PMI for September at 53.6, lower than the August reading of 54.5. The Services PMI data carries a significant impact on the US Dollar Index as it represents the service sector, which accounts for two-thirds of the US economy.
Silver technical analysis
Silver price delivers a breakdown of the Head and Shoulder chart pattern on a daily scale, which results in a vertical sell-off. The white metal breaks sharply below the neckline of the aforementioned chart pattern plotted from June 23 low at $22.11. Potential support is placed from March 08 low at $19.93.
The asset trades below the 200-day Exponential Moving Average (EMA), which indicates that the long-term trend is bearish.
The Relative Strength Index (RSI) (14) slips into the bearish range of 20.00-40.00, which warrants more downside.
Silver daily chart
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Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
