- Silver retreats from most of its intraday gains after robust US private employment data for January is released.
- Strong labor demand may prompt the Federal Reserve to keep interest rates steady for a longer period.
- Investors anticipate that trade tensions will remain primarily between the US and China.
Silver (XAG/USD) surrendered nearly all its intraday gains, falling back to around $32.00 in Wednesday's North American session. The white metal came under pressure as the US Dollar strengthened following upbeat ADP Employment Change data for January. The US Dollar Index (DXY), which gauges the Greenback against six major currencies, found buying interest near 107.40 despite remaining over 0.4% down intraday.
According to reports, the US private sector added 183K new jobs in January, significantly surpassing estimates of 150K and revising the previous count of 122K upward to 176K. The strong labor demand is likely to prompt Federal Reserve officials to maintain current interest rates for an extended period, as noted by Fed Chair Jerome Powell, who stated that policy adjustments would only come after seeing "real progress in inflation or at least some weakness in the labor market." This dovish stance on monetary policy weighs on precious metals like silver.
Investor sentiment for silver is also being tempered by diminishing fears of an all-out global trade war. Market participants expect trade tensions to remain primarily between the US and China, particularly after President Trump suspended plans to impose 25% tariffs on Canada and Mexico - moves seen as strategic negotiation tactics. Although 10% tariffs on China are set to take effect in February, China has already imposed retaliatory levies on various US exports.
On the technical front, silver is attempting to break above an immediate resistance level at $32.50, defined by the December 9 high. The outlook remains bullish, with the 20-day Exponential Moving Average (EMA) sloping upward near $30.90 and the 14-day Relative Strength Index (RSI) trading between 60.00 and 80.00, indicating strong momentum. Downside support is expected around $29.50, marked by the upward-sloping trendline from the August 8 low of $26.45, while the October 31 high of $33.90 presents a key barrier.
Sliver daily chart
