Silver prices swing wither side of the $24.00 level as ADP data points to mending US economy

• Silver is trading either side of $24.00 as markets trade with caution ahead of key events later in the week.
• Biden will be unveiling infrastructure spending plans on Wednesday, ahead of ISM manufacturing on Thursday and NFP on Friday.
• ADP National Employment data points towards a solid NFP number and the ongoing healing of the US economy.

Spot silver prices (XAG/USD) are currently consolidating either side of the $24.00 level, as markets trade with a broad sense of caution ahead of key events later in the session and the week; US President Joe Biden will be unveiling the details of part one of his administration's two-part infrastructure spending plan on Wednesday at 21:20BST, with the initial stage expected to carry a price tag of $2.25T and be funding in part by hikes on corporation taxes (and likely also on the rich). The US ISM Manufacturing PMI survey for the month of March is then released on Thursday ahead of the March US labour market report on Friday.

XAG/USD is yet to convincingly break to the south of the $24.00 level and prices are for now finding support around the prior annual lows at just above $24.00. Assuming this level does go, the door would be open (technically speaking) to a move down towards last September and November lows under $22.00, amid a lack of any notably key areas of support in the interim.

Driving the day

ADP’s estimate of the number of jobs added to the US economy in March was recently released. The payroll firm’s data indicated that 517K jobs were gained on the month, a little below expectations for ADP’s data to show 550K in job gains. Needless to say, however, more than half a million in job gains is pretty impressive. If the official labour market report on Friday confirms half a million in job gains, that would put total non-farm employment at roughly 143.5M, more than 13.5M above last April’s 130Mish lows, but still substantially below pre-pandemic levels of roughly 152.5M in total employment in the country.

Note that while ADP has not been particularly accurate in predicting the official NFP number over the past few months, it has helped to indicate the trend; i.e. ADP accurately predicted the stagnation in the rate at which jobs have been gained in the US into the end of 2020 and start of 2021, and may now be pointing towards the expected pick up in employment over the coming weeks. Wednesday’s ADP data should instill confidence in the market’s consensus prediction for 650K jobs to have been added to the US economy in March.

Markets, including precious metals such as silver, have not been particularly responsive to the above data, which came in pretty close to expectations. But more confirmation that the US economy is on the mend and is set to perform well in 2021 and beyond is unlikely to be a long-term positive for the likes of silver as better US economic conditions ahead likely means a combination of higher US government bond yields (which is negative for precious metals) and a stronger dollar (also precious metal negative) – the latter is particularly likely to be true so long as the US economy is on the path to outperforming its peers (such as the EU, UK and Japan), which seems likely amid the flood of fiscal stimulus already unleashed and in the pipeline in the form of infrastructure investment.