Silver Price Forecast: XAG/USD Rebounds Despite Upbeat US NFP Data

• Silver Price Recovers US NFP-Inspired Losses as Dollar Turns Volatile.
• All components of the US NFP, such as labor demand, unemployment rate and labor cost, surprised to the upside.
• US 10-year Treasury yields are holding on to gains around 4.06%.

The price of the Silver (XAG/USD) rebounds after a sharp sell-off from $22.70 even though the US Bureau of Labor Statistics (BLS) has reported an optimistic Non-Farm Payrolls (NFP) data for December. The number of jobs created in December was 216,000, above expectations of 170,000 and the previous revised reading of 173,000. Unemployment rate remains unchanged after strong selling at $22.70.

The unemployment rate remains unchanged at 3.7%, while market participants anticipated it higher at 3.8%. Wages surprisingly accelerated to 4.1% as investors expected average annual hourly earnings to slow to 3.9%, down from previous growth of 4.0%. Monthly wages grew at a steady 0.4% versus expectations of 0.3%.

All parameters of the US NFP report have remained above expectations, which has eased bets in favor of rate cuts by the Federal Reserve (Fed) starting in March. According to CME's Fedwatch tool, the odds of a rate cut decision at the March policy meeting have fallen sharply to 51% from 62% following the release of official US employment data.

The S&P 500 is expected to open with a sideways and negative tone, taking into account the overnight futures. The US Dollar Index (DXY) has fallen sharply after failing to maintain the recovery to a three-week high of 103.00, while the US 10-year Treasury yields remain higher at 4.06%.

Silver technical analysis

Silver price has been on the bearish trajectory after a breakout of the head and shoulder chart pattern formed on a four-hour scale. The Relative Strength Index (RSI) (14) has moved towards the bearish range of 20.00-40.00, indicating that the bearish momentum is intact.

Four hour chart