Weaker Job Growth Raises Concerns, Creating Uncertainty for Fed

Overview

The non-farm payrolls report had significant implications for the Federal Reserve and silver prices. The market remained stable as the US jobs data raised doubts about the labor market’s strength and the Fed’s rate hike plans.

The report revealed the fewest jobs added in 2-1/2 years in June, but strong wage growth suggested a tight labor market. While lower job growth raised uncertainty, consistent wage growth indicated the Fed would likely raise rates later this month.

The report also showed a decline in jobs created in April and May, signaling businesses’ caution due to higher borrowing costs. Part-time work due to economic reasons increased as hours were reduced.

Despite weaker job growth, the overall pace remained strong compared to historical norms, contradicting recession forecasts. The report missed expectations for job gains, the first miss in 15 months.

Job growth averaged 278,000 per month in H1, while 70,000-100,000 jobs per month are needed for population growth.

Average hourly earnings rose in June, keeping annual wage growth at 4.4%, exceeding the Fed’s 2% inflation target. The unemployment rate dropped to 3.6% from May’s 3.7% high.

Short-Term Outlook

The report’s mixed data may influence the Fed’s interest rate decisions. Weaker job growth could lead to caution, while wage growth may support further rate hikes. These uncertainties may impact silver prices as investors adjust their strategies based on the Fed’s actions and labor market conditions.

Technical Analysis

The analysis of the Comex Silver market suggests cautiously bullish sentiment. The current 4-hour price is slightly higher than the previous close, indicating mild upward momentum. It is trading inside the 200-4H and 50-4H moving averages, implying a neutral stance with a potential equilibrium between buyers and sellers. The 14-4H RSI reading of 55.43 falls within the neutral range, further supporting a balanced market sentiment.

The main support area is at 22.185, while the main resistance area ranges from 24.225 to 24.475. The price action suggests potential breakouts are possible with the 200-4H moving average at 23.396 the trigger for an upside surge and the 50-4H moving average the trigger for a breakdown.