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Asset Watch
Thrusday, October 5, 2023
After a significant upward surge in the US dollar’s price over the past week, its value has stabilized as some investors reduced their long positions, adopting a wait-and-see approach in anticipation of the upcoming US jobs data, set to be released tomorrow at 4:30 pm UAE time.
This crucial data will shed light on the strength of the US labour market, a pivotal factor influencing the high levels of inflation prevalent in the country. Projections suggest that the US economy added approximately 170,000 jobs in September. Any figure lower than this estimate would signify a weakening labour market, potentially reducing the likelihood of sustained high inflation levels. Consequently, the Fed might consider the possibility of postponing the anticipated interest rate hike pencilled in the November meeting. This scenario would likely have a negative impact on the US dollar’s prices and a positive effect on the prices of precious metals such as gold and silver.
Conversely, if the jobs data surpasses expectations, indicating a robust labour market, it could heighten the likelihood of the 25-bps hike in the November FOMC meeting. This scenario might prompt markets to continue pricing of the expected interest rate hike, resulting in a higher US dollar and a decline in commodity prices, particularly precious metals.
Chart source ADSS Platform
At the start of this week, the silver broke below the June 23 low at 22.11 and printed its lowest level in multiple months. On Tuesday, the price rallied as some traders took profits. Currently, the metal moves within the trading zone located between 22.06- 21.30 and could be on the way for a test of the low end of that zone. Therefore, a daily close below the low end of the zone could embolden bears to press towards 19.31 nonetheless, the support level located at 19.74 should be considered.
On the other hand, a daily close above the high end of the zone reflects a weaker bearish sentiment, especially when the RSI abandons the oversold territory (rises above 30). All of this may trigger a rally towards 23.52 that said, the resistance level located at 22.59 should be kept in focus.
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