On Monday, the XAG/USD saw significant gains, mainly by a positive market mood and a relatively weak USD. That being said, markets may see volatility during the week as the US will release key labor market data that will affect the bets on the next Federal Reserve (Fed) decisions. According to the consensus, July saw a decline in job creation, while hourly wages and the unemployment rate held steady. In that, the direction of the US labor market will be crucial for investors, as Chair Powell noted last week that the decision to set the next interest rate will only be based on new data. In addition, he added that to normalize inflation, the Fed expects “some” softening of the labor market.
The JOLTs Job Opening report will be released on Tuesday, and the ADP employment change report will be released on Wednesday. New jobless claims data will be released on Thursday, and the Non-Farm Payrolls (NFP) report on Friday, the primary week’s highlight. As for now, according to World Interest Rate Possibilities (WIRP) tool, the markets are currently pricing in a 25% chance of a 25 bps hike in the September meeting and a 40% chance of a 25 bps hike in November. However, those expectations may see significant changes this week, which could fuel volatility in bond markets and hence in the price dynamics of the precious metals. Based on the daily chart, the XAG/USD appears to be bullish in the short term, as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) suggest that the buyers have control as they stand in positive territory. Additionally, the pair is above the 20,100,200-day SMAs, highlighting the continued dominance of bulls on a broader scale. Resistance levels: $24.90,$25.00, $25.30. Support levels: $24.30, $24.15 (20-day SMA), $24.00.