Silver Price Analysis XAGUSD tumbles to eight-week lows, worst week since October
- US Dollar soars across the board after NFP.
- US ISM Service brings in more favourable data.
- Silver drops by more than 3% on Friday; down 8% from Thursday’s peak.
Metals extended the sell-off after the US official employment report. Silver hits fresh monthly lows near $22.50 and is having the worst day in months.
Strong labor market, Service sector expanding again
US economic data released on Friday came in above expectations, reflecting a strong labor market and an improvement in service sector activity. The numbers boosted the US Dollar and Treasury bond yields. Wall Street is moving without a clear direction.
The data published on Friday by the US Bureau of Labor Statistics (BLS) showed that Nonfarm Payrolls rose by 517K in January, significantly above the market expectation of 185K. November and December’s figures were revised higher. The unemployment rate dropped unexpectable to 3.4%.
A different report released more recently revealed that economic activity in the service sector turned into expansion territory in January with the ISM Service PMI rising from 49.2 in December to 55.2, surpassing the market expectations of 50.4. In addition, the Price Paid Index dropped modestly from 68.1 to 67.8, above consensus of 65.5.
Silver hit a fresh low after the ISM data at $22.47, the lowest since December 7. As the end of the week looms, XAG/USD attempts to trim losses and trades at $22.65, down 3.40% for the day. From Thursday’s high it has fallen 8%.
Technical added pressure to XAG/USD and suggest at the moment that more losses are likely. Price is breaking a one-and-a-half consolidation range to the downside, after being rejected again from above $24.00.
Interim support emerges around $22.50, and below is the strong barrier at around $22.00. A recovery back above $23.00 could alleviate the bearish pressure.