Key Takeaways:
- Silver price drops below $30.00 as US yields soar after upbeat US NFP report for May.
- Job and wage growth beat estimates, prompting a need for a restrictive interest rate framework.
- Pause in PBoC’s gold-buying also contributed to the drop in the Silver price.
Silver price (XAG/USD) plummeted below the psychological support of $30.00 in Friday’s New York session following a strong United States Nonfarm Payrolls (NFP) report for May. The report indicated robust labor demand and stronger-than-expected wage growth momentum.
Fresh payrolls numbers exceeded expectations, with 272K jobs added compared to the estimated 185K. Average Hourly Earnings also rose by 0.4%, higher than the projected 0.3%. The data suggests a need for a prolonged restrictive interest rate policy by the Federal Reserve, which is favorable for yields and the US Dollar.
In addition to the strong US economic data, the pause in the People’s Bank of China’s gold-buying streak further weighed on the Silver price, reinforcing the selling pressure on the metal.
Silver Technical Analysis
The Silver price is showing signs of a potential bearish reversal, with a Head and Shoulder chart pattern forming on a four-hour timeframe. A break below the neckline at $29.00 could confirm this bearish trend.
Spot prices have fallen below the 50-period Exponential Moving Average (EMA) at $30.50, indicating a bearish near-term outlook. The 14-period Relative Strength Index (RSI) has also dipped below 40.00, suggesting downward momentum.
Silver Four-Hour Chart
FAQ
1. Why did the Silver price drop below $30.00?
The Silver price dropped due to strong US economic data, particularly the upbeat US NFP report for May, which showed robust job and wage growth, prompting a need for a restrictive interest rate policy by the Federal Reserve.
2. How did the pause in PBoC’s gold-buying impact the Silver price?
The pause in the People’s Bank of China’s gold-buying streak added selling pressure on Silver, as investors turned towards interest-bearing assets due to the favorable interest rate environment in the US.
3. What technical indicators suggest a bearish trend in Silver?
The Head and Shoulder chart pattern forming on a four-hour timeframe, break below the neckline at $29.00, falling below the 50-period EMA, and the RSI slipping below 40.00 all indicate a potential bearish reversal in Silver.
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