Silver price (XAG/USD) falls back swiftly after a short-lived pullback near $24.45 in the early New York session. The white metal faces a significant sell-off as the additions of fresh private payrolls in the United States labor market were higher than expectations in July. The Automatic Data Processing (ADP) agency of the US economy reported that fresh 324K individuals were recruited in July while investors were anticipating employment of 189K. Strong demand for labor by US private sector indicates that inflationary pressures could rebound ahead. This has also set a positive undertone for the Nonfarm Payrolls (NFP) data, which will be published on Friday at 12:30 GMT.
The Federal Reserve (Fed) said in the monetary policy statement that further policy action will be highly data-dependent. And now, a tight labor market along with stellar Q2 Gross Domestic Product (GDP) performance could consider one more interest rate hike from the Fed. Meanwhile, the US Dollar Index (DXY) climbs above the crucial resistance of 102.40 amid negative market sentiment. S&P500 is expected to open on a negative note following bearish sentiment from overnight futures. US equities are expected to remain under pressure as Fitch downgraded the US economy amid concerns over rising fiscal spending.
Silver price is maintaining a lower high formation on an hourly scale, which indicates that investors are capitalising pullbacks as selling opportunities. The asset could deliver further downside if it drops below the horizontal support plotted from July 27 low around $24.00. The 200-period Exponential Moving Average (EMA) at $24.50 is acting as a barricade for the Silver bulls. Meanwhile, the Relative Strength Index (RSI) (14) slips into the bearish range of 20.00-40.00m indicating an activation of the downside momentum.