- Strong US jobs data raised speculation about a new Fed tightening.
- The dollar remains higher as high Treasury yields weigh on silver prices.
- US non-farm payrolls are in the spotlight, while Fed officials forecast the unemployment rate to rise to 4.6% in 2023.
the price of silver It extended its losses for the second day in a row after hitting a nine-month high of around $24.54 on Tuesday, plunging more than 2%. Strong US labor market data raised speculation of further tightening by the Federal Reserve (Fed), as shown by rising US Treasury yields. Therefore, XAG/USD is trading at $23.20 after reaching a daily high of $23.91.
US jobs data dampened traders’ sentiment. Private hiring rose in December, as the ADP Employment Change report showed the US economy added 2,345,000 jobs, beating estimates. A few minutes after the publication, the US Department of Labor (DoL) revealed that initial claims for unemployment benefits in the last week fell to their lowest level since late September, at 204,000 against an estimated 225,000. . It reported that Continuation Requests contracted to 1.694M less than the 1.708M expected.
At the same time, the US Department of Commerce (DoC) revealed that the US Trade Balance for December narrowed its deficit, coming in at $-61.51B against the $-73.0B forecast.
Aside from the US data release, XAG/USD extended its losses after opening lower since the Asian session. During the European session, silver fell to its daily low of $23.18, although it recovered to the $23.60 area. However, once US traders reached their desks, the US dollar (USD) resumed its bullish trend, to the detriment of dollar-denominated commodities.
The Dollar Index (DXY), which tracks the value of the US dollar against a basket of six currencies, gained 0.86%, back above the 105,000 mark, a factor keeping precious metals under pressure. In the same vein, US Treasury yields are picking up ground, with the US 10-year Treasury yield rising five basis points to 3.739%, a headwind for the white metal.
On the other hand, the heads of the US Fed, Esther George and Raphael Bostic, have given statements. Kansas City Fed President Esther George said high inflation calls for Fed action, while her colleague Atlanta Fed President Raphael Bostic added that inflation is the biggest headwind for the US economy.
On the US economic agenda will be the non-farm payrolls report, for which most bank analysts estimate an increase of only 200,000 in December. Investors should note that the Fed’s latest Summary of Economic Projections (SEP) forecasts Unemployment Rate growth to 4.6%, but December estimates are around 3.7%. Losses to the downside should be seen as dollar positive as they will suggest the need for further rate hikes.
Silver Key Technical Levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
