Silver Price Forecast: XAG/USD recovers half of early losses, still down ahead of US NFP data

• Silver price is still trading 1.7% lower to near $72.60 in the countdown to the US NFP data.
• Latest Fed remarks have shown that officials are more concerned about high inflation than weak job demand.
• Fed’s Schmid states that the choice for the central bank is between holding interest rates or raising them.

Silver price (XAG/USD) claws back half of its early losses in the European trading session on Friday, but is still 1.7% down to near $72.60. The white metal is expected to remain volatile, as the United States (US) Nonfarm Payrolls (NFP) data for May is scheduled to be published at 12:30 GMT.

Investors will pay close attention to the US NFP data to get fresh cues regarding the Federal Reserve’s (Fed) monetary policy outlook.

The US NFP report is expected to show that the economy created 85K fresh jobs, lower than 115K in April. The Unemployment Rate is seen steady at 4.3%. Average Hourly Earnings, a key measure of wage growth, is seen arriving lower at 3.4% Year-on-Year (YoY) from the previous reading of 3.6%. On a monthly basis, the wage growth measure is expected to have grown at a faster pace of 0.3% against 0.2% in April.

Signs of improving US job demand would prompt hawkish Fed prospects; however, soft figures would have a limited impact on the Fed’s monetary policy expectations, as recent remarks from officials have indicated that they are more concerned about high inflation than weak employment conditions.

On Thursday, the comments from Kansas City Fed Bank President Jeffrey Schmid indicated that the central bank has to make a choice between holding interest rates at their current levels or raising them to tame inflationary pressures.