Key Takeaways:
- Silver price plunges to $26 despite a sell-off in the US Dollar and bond yields
- The US NFP report for April exhibited weak labor demand and soft wage growth
- Weak labor demand will boost Fed rate cut prospects for September
Weak US Labor Demand and Soft Wage Growth Impact Silver Price
Silver price (XAG/USD) falls sharply to $26.00 despite weaker-than-expected United States Nonfarm Payrolls (NFP) data for April. The NFP report revealed that employers hired 175K job-seekers, below the consensus of 243K and the prior reading of 315K. The Unemployment Rate increased to 3.9%, contrary to investor expectations.
Impact on Fed Rate Cut Prospects and Market Conditions
Soft wage growth and weak labor demand suggest the Federal Reserve (Fed) may consider an interest rate cut, challenging the US Dollar and Treasury yields. Investors anticipate a rate reduction starting from the September meeting. The US Dollar Index (DXY) hits a three-week low, while 10-year US Treasury Yields weaken to 4.49%.
Silver Technical Analysis and Outlook
Silver price approaches a horizontal support level around $26.09, marking a significant shift in momentum. The 20-period Exponential Moving Average (EMA) at $27.20 serves as a key resistance. Despite some bearish signals in the Relative Strength Index (RSI), the long-term outlook for Silver remains stable.