Silver Price Analysis: XAG/USD tumbles below $23 as US labor market conditions improve

• Silver price falls below $23.00 amid outperformance of US labor market data.
• US private employers added 164K job seekers in December against 115K.
• Silver price faces a sharp sell-off after a H&S breakdown.

Silver price (XAG/USD) faces an intense sell-off as the labor market conditions in the United States have improved significantly. The US Automatic Data Processing (ADP) has reported that private employers hired 164K workers in December, which were significantly higher than expectations of 115K and the former reading of 103K.

Apart from that, individuals claiming jobless benefits for the first time last week dropped significantly. The US Department of Labor has reported that Initial Jobless Claims (IJC) for the week ending December 29 were 202K, lower than the consensus of 216K and the prior release of 220K.

Improving labor market conditions indicate robust economic prospects in the US economy, which could allow Federal Reserve (Fed) policymakers to support for keeping interest rates higher for a longer period. The market participants are anticipating that the Fed will start its ‘rate-reduction’ campaign from March. A delay in prospects of rate cuts could dampen overall market sentiment and impact demand of bullions.

The US Dollar Index (DXY) rebounds to near 102.50 as upbeat labor market data. More action in the US Dollar is highly likely as investors await the Nonfarm Payrolls (NFP) report for December, which will be published on Friday.

Silver technical analysis

Silver price dives after a breakdown of the Head and Shoulder chart pattern formed on a four-hour scale. The 20-period Exponential Moving Average (EMA) around $23.40 continues to weigh on Silver price bulls.

The Relative Strength index (RSI) (14) has shifted into the bearish range of 20.00-40.00, which indicates that a bearish momentum is intact.

Silver four-hour chart