Silver Prices Analysis: XAG/USD declines after strong ISM Services PMI and soft JOLTs, USD recovers

In Tuesday's session, the XAG/USD metal is experiencing a downtrend, trading around the $24.18 mark. This downward movement was seen after the report of robust Institue For Supply Management (ISM) Services PMI and somewhat softer JOLTs opening figures as investors seem to have recalled that the Federal Reserve (Fed) remains data-dependent, so strong figures from the US economy may fuel a more hawkish stance from the bank.

In line with that, the US. Service sector as the Institute for Supply Management (ISM) Services PMI for November registered an expansion coming in at 52.7 against the consensus of 52 from the previous 51.8. On the other hand, data from the U.S. Bureau of Labor Statistics reported that JOLT's Job Openings for October dropped to 8.73M, lower than the 9.3M expected.

As a reaction, US Treasury bond yields trended downwards but gained momentum after the data. The 2-year rate is 4.60%, while the 5-year and 10-year rates are at 4.15% and 4.19%, respectively. This recovery in yields impacts negatively on the price of non-yielding metals such as these bond rates often represent the opportunity cost of holding them. On the other hand, the US Dollar, measured by the DXY index, is up with mild gains at 103.75 also adding pressure to the price.

That said, as the focus is set on incoming data, the investor's attention shifts to the upcoming labor market reports. On Wednesday, the US will release its Automatic Data Processing Inc. (ADP) Employment Change report, and on Friday, three important labor market metrics will be released, including  Average Hourly Earnings, Unemployment Rate, and Nonfarm Payrolls. In that sense, the health of the sector may likely shape the expectations on the Fed’s next moves ahead of the next December 15 meeting, which will have an impact on the bond market and on the metal’s price dynamics.

XAG/USD levels to watch

On the daily chart, the Relative Strength Index (RSI) displays a negative slope in positive territory, indicating the receding momentum of buyers. Furthermore, gaining red bars in the Moving Average Convergence Divergence (MACD) denote sellers are beginning to stamp their authority, introducing additional selling momentum.

While there are indeed some strong sell signals in the short term, the metal continues to reside above the 20,100,200-day Simple Moving Averages (SMAs), an indicator that suggests buyers still hold the reins on larger time frames. In that sense, despite the bearish roar in the short term, the long-term picture painted by the SMAs cautions against prematurely declaring a bearish dominance.

Support Levels: $24.00, $23.76 (20-day SMA), $23.00.

Resistance Levels: $25.00, $25.50, $26.00.

XAG/USD daily chart