- Earlier on Monday, the silver price reached its lowest level since September 2020 at $22.10.
- The market is still reacting to the better-than-expected non-farm payrolls figures released on Friday.
- In the ensuing sessions, the focus will be on US inflation and employment figures.
The silver price has extended last week’s losses as a reaction to Friday’s job data. The US Bureau of Labor Statistics indicated that the unemployment rate dropped from 5.9% in June to 5.4% in July. Furthermore, nonfarm payrolls beat the estimates of 870,000 and the prior month’s 938,000 to come in at 943,000.
In today’s session, the focus will be on JOLTs job openings data. The forecasted 9.270 million is higher than the prior month’s 9.209 million. A higher-than-expected figure is likely to act as a bearish catalyst for the silver price as it boosts the US dollar.
In the ensuing sessions, the prices will also be reacting to the US bond yields. Notably, Treasury yields have an inverse correlation with precious metals. As such, rising yields usually act as a bearish catalyst for the silver price.
At the time of writing, the benchmark 10-year Treasury yields were up by 0.38% at 1.30. It is currently at its highest level since 23rd July. Since hitting its low of 1.12 mid-last week, it has rebounded by about 15.59%. The five and 30-year Treasury yields are also up by 1.32% and 1.01%, respectively.
Investors will also be eyeing the US inflation data. On Wednesday, the US Bureau of Labor Statistics is scheduled to release the CPI data. Analysts expect core consumer prices to have risen by 0.4% in July on a month-on-month basis. Notably, the figures have been coming in higher-than-expected since March. With the inclusion of the volatile food and energy components, CPI has been forecasted at 0.5% MoM compared to the prior month’s 0.9%.
On Thursday, the US producer prices are expected to come in at 0.6% MoM, which is lower than June’s 1.0%. With the exclusion of the volatile elements, experts expect a core PPI reading of 0.5% MoM compared to the previous month’s 1.0%.
The initial jobless claims data, which is also scheduled for release on Thursday, is also bound to impact silver price. Over the past three weeks, the number of unemployment claims has been higher than expected. In this week’s release, analysts expect the numbers to have declined from the prior week’s 385,000 to 373,000. The data is expected a week after the positive non-farm payrolls that pushed the silver price to its lowest level since September 2020.
Silver technical analysis
Silver has begun the week on a weak footing as the market continues to react to the positive job data. Earlier on Monday, the precious metal dropped to its lowest level since September 2020 at 22.10. While it has since rebounded, it remains in a downtrend. At the time of writing, the silver was down by 1.86% at 23.89. After hitting a three-week high of 26.00 in the past week, it has since declined by about 8.08%.
The price is trading below the 25 Exponential Moving Averages of 25 and 50 periods on a four-hour chart. Besides, with an RSI of 24, it is in the oversold territory. The silver is likely to remain in a downtrend in the ensuing sessions.
In the near term, it is likely to record a corrective rebound to the psychological level of 24.00. Additional buying pressure may push it further to 24.50 before pulling back to its current support level of 23.76 or lower to 23.00. However, a move above 24.50 will invalidate this thesis.