Silver prices brace for Key U.S. economic data releases

The U.S. dollar declined against major currencies such as the euro and the Japanese yen at the start of the week, as investors continue to assess the outcome of last week’s Federal Reserve meeting. The Fed revised down its inflation outlook for next year from 2.6% to 2.4% and left the door open to the possibility of more than one interest rate cut in 2026. This stance contrasts with the dot plot, which indicated a single 25-basis-point cut next year.

Investors are seeking greater clarity on the future direction of U.S. monetary policy. Such clarity is expected to come from upcoming speeches by Federal Reserve officials, as well as key U.S. economic data, particularly inflation, employment, and unemployment figures.

Greater clarity on the U.S. labor market

This week, investors are closely monitoring critical U.S. economic releases, with U.S. labour market data for October and November scheduled for release today. These reports were previously delayed due to the U.S. government shutdown, which lasted more than 40 days.

Market expectations point to a slowdown in job creation, with nonfarm payrolls projected to decline from 119,000 in September to 55,000 in October and just 25,000 in November. This would signal a clear deterioration in U.S. labour market conditions. Should employment figures come in weaker than expected pressure on the Federal Reserve to continue cutting interest rates is likely to intensify.

Under this scenario, the U.S. dollar could come under further pressure, while precious metals, traditionally inversely correlated with the dollar, may benefit, as markets price in a potential interest rate cut as early as March. It is worth noting that markets are currently pricing in a 52% probability of a rate cut in March, according to CME Group data.

Silver prices – Technical Analysis

On December 12, silver prices surged to a new all-time high of $64.63 /oz retreating amid profit-taking activity. The white metal eyes a test of the high end of the current trading zone, defined between $54.46 and $65.00.

A daily close above the upper bound of this zone would signal strong bullish momentum, potentially paving the way for new record highs, with prices the $70.00 per ounce level. In this bullish scenario, key psychological resistance levels at $67.00 and $68.00 should be closely monitored.

Key levels in the alternative scenario

On the downside, the Relative Strength Index is approaching a potential drop below the 70 level. If this occurs, it could be interpreted as an early sign of weakening bullish momentum, possibly driven by further profit-taking and the closure of long positions. As a result, silver prices may come under renewed downward pressure.

Therefore, a failure of prices to close above $65.00 would be considered a signal of a potential pullback, with prices likely to trade toward the low end of the trading zone, located at $54.46.

Silver – Daily Price Chart

Chart Source: ADSS Platform