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Gains are Capped Ahead of the Report on Non-farm Payrolls for Silver Prices


Harvest Global Markets :

Investors were anticipating the Federal Reserve’s decision to maintain higher interest rates, which would put pressure on non-yielding metals and cause silver prices to drop for the week. Although there were worries about a future recession due to rising interest rates, U.S. private payrolls in June beat forecasts, demonstrating a strong labor market. In the private sector, the ADP employment report showed a notable increase of 497,000 jobs, topping both May’s gain of 267,000 jobs and the 220,000 consensus estimate.

The ADP data paves the way for Friday’s official June payrolls report, despite being less trustworthy than other job measures. 240,000 non-farm payrolls are expected to be added, which is less than the 339,000 jobs added in May, according to economists surveyed by Dow Jones. Investors may, however, be downgrading their hopes for a greater number, potentially indicating that the Federal Reserve will resume interest rate increases this month after a break. The central bank is expected to decide on an interest rate on July 26.

At the June policy meeting, Federal Reserve Bank of Dallas President Lorie Logan argued in favor of raising rates and emphasized the necessity of doing so in order to moderate a strong economy. Since they increase the opportunity cost of storing non-yielding metals, rising U.S. interest rates are particularly sensitive to silver prices. Investors using CME’s Fedwatch tool currently predict a 25-basis-point rise in July following the pause seen last month with a 92% probability.

After the release of the labor market statistics on Thursday, the yield on 10-year Treasury notes rose to its highest level since March 2, adding to the downward pressure on silver. Investors in silver are therefore keenly awaiting the U.S. nonfarm payrolls report on Friday to learn more about the direction of the Fed’s rate hikes. Amid heightened tensions, they also pay careful attention to U.S. Treasury Secretary Janet Yellen’s trip to Beijing. The results of these events will probably influence the short-term outlook for silver, which may display bullish or negative patterns.

Breaking through the resistance levels between 23.50 and 23.75 may be difficult at the current price, which is closer to the support area of 22.70. The silver market view is generally bearish, so traders should proceed with care as they watch for additional confirmation in the price movement.


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