Silver Price Analysis: XAG/USD consolidates above support in $22.00 area for now ahead of US jobs data

• Silver is trading with a negative bias but is for now holding above support in the $22.00 area.
• Traders are focused on the imminent release of US jobs data and how it might impact Fed policy expectations.
• If markets react by upping Fed tightening bets, XAG/USD could slide towards Q4 2021 lows in the mid-$21.00s.

Spot silver (XAG/USD) is trading with a negative bias, though for now remains supported above the $22.00 per troy ounce mark, ahead of the release of US labour market data at 1330BST, as well as lots of Fed speak thereafter. $22.00 has acted as a significant support level in 2022 and a break below it could open the door to technical selling into the Q4 2021 lows in the $21.50 area.

The upcoming Bureau of Labour Statistics data release, which is expected to show nearly job gains of nearly 400,000 in the US last month, as well as the unemployment rate falling to 3.5% from 3.6%, will be viewed in the context of how it impacts the outlook for Fed policy. Earlier this week, the Fed raised interest rates by 50 bps and outlined quantitative tightening plans as expected, whilst also signaling intent to continue with 50 bps rate hikes at upcoming meetings in a bid to get interest rates back to around 2.5% by the end of the year.

A sharp rally in US yields on Thursday as bond market participants took a more hawkish view of Wednesday’s Fed announcement saw XAG/USD pull sharply lower from earlier weekly highs in the $23.30 area. Silver is currently on course to post a third successive week in the red, during which time it has reversed nearly 15% lower from mid-April highs in the low-$26.00s. If anything in the labour market report triggers fresh hawkish Fed bets and further yield upside, XAG/USD is at risk of breaking lower.