Silver Price Analysis: XAG/USD Corrects to $24 as Fed Soft Landing Hopes Continue to Wane

• The price of Silver continues to correct as the Dollar remains firm due to stable job growth.
• The Fed’s Mester in his remarks said that demand and supply in the labor market is coming to a better balance.
• The price of silver shows an expanded triangle chart formation.

The price of silver (XAG/USD) extends its correction near the crucial support of $24.00 despite investors expecting the Federal Reserve (Fed) to have finished raising interest rates. The white metal has remained on offer since Thursday, but the overall trend remains positive as the tense US job market begins to cool.

S&P 500 futures remain off as US markets are closed for Labor Day. Due to the extended weekend, weak volume is also expected in the forex space. In addition, the atmosphere in the markets is calm due to the long weekend.

The Dollar Index (DXY) looks set to extend its rally above immediate resistance at 104.20 as job growth remains strong in August.

Cleveland Fed President Loretta Mester said Friday that supply and demand in the labor market are reaching a better balance, but the labor market remains strong. She further added that although job growth has slowed and job openings have decreased, the unemployment rate is low.

On the other hand, the US manufacturing PMI for August increased to 47.6 from 46.4 in July, but remained below 50.0, which in turn shows a contraction of activities. Following the factory activities, investors are focused on the services PMI for August, which is due to be released on Wednesday.

Silver Technical Analysis

The price of silver is showing an extended triangle formation on the two-hour chart. The decline is supported near horizontal resistance drawn from the lows around $23.92 on Aug. 25. The 20-period EMA indicates that the medium-term trend is down. The Relative Strength Index (RSI) (14) is drifting towards the bearish range of 20.00-40.00, indicating that a bearish momentum is already active.

Silver two-hour chart