Spot Silver Forecast: Focus to Friday official labour Report

Silver Forecast: A barrage of US labour market data in recent trade gave mixed signals, with ADP’s estimate of employment change for May missing consensus and adding some downside risks to the market’s expectations for a 325K gain in non-farm payrolls in May on Friday.

Weekly jobless claims data

While the second estimate of Q1 Unit Labour Costs saw an upward revision to 12.6% QoQ from an already spicey 11.6%. Weekly jobless claims data was also robust, but the net impact has been that the US dollar has fallen to fresh session lows in recent trade as US yields continue to trade with losses on the day.

Crude Oil Forecast: Crude Oil Downside Target 8800——8500: Spot Silver Forecast: Focus to Friday official labour Report

This has created a favourable backdrop for spot silver (White Metal) prices, which were last trading up about 30 cents or roughly 1.3% on the day in the $22.10 area per troy ounce. That marks a more than 3.0% bounce from Wednesday’s sub-$21.50 lows, with the bulls now eyeing a test of last week’s highs just under $22.50.

Silver Bullish breakout

However, any bullish breakout in silver will have to wait until after Friday’s official US labour market report is released. If job gains do underwhelm, thus indicating a weaker-than-expected economy and less pressure on the Fed to tighten monetary policy so aggressively, that could provide impetus to the bulls. A break above resistance in the $22.50 area would open the door to a run higher towards $23.00 and resistance in the mid-$23.00s.

Inflation

Note that traders will also be closely watching Friday’s US wage growth metrics and if these surprise on the upside, that would come as a worry to the Fed (and markets), as everyone has been hoping that inflation might have now peaked. In this case, a dip back below the 21-Day Moving Average (at $21,76), which silver has been pivoting either side of in recent weeks, is on the cards, plus a test of earlier weekly lows in the mid-$21.00s.

• Silver cuts some of its weekly losses but stays losing 1%.
• Risk-aversion underpins the non-yielding metal, alongside the US Dollar
• Positive US economic data keep the greenback tilted to the upside.
• Fed policymakers see 50 bps rate hikes in June and July.
• Silver Price Forecast (White Metal): Tilted downwards, though a break above $22.44, would open the door towards the 50-DMA.