The price of silver (XAG/USD) experienced a decline from its intraday high of $28.44 during Thursday’s New York session following the release of strong United States (US) Retail Sales data for July and a lower-than-expected number of initial jobless claims for the week ending August 9.
Despite the struggles to maintain the crucial support level of $28.00, upbeat US data has led to a recovery in the US Dollar (USD) and bond yields. The US Dollar Index (DXY) has risen above 103.00, while 10-year US Treasury yields have surged to nearly 3.96%. The increase in yields on interest-bearing assets has negatively impacted non-yielding assets like Silver by raising the opportunity cost of holding investments in them.
The Retail Sales data, which measures consumer spending, showed a 1% growth compared to the estimated 0.3%. Additionally, Initial Jobless Claims came in lower at 227K, below the estimated 235K and the prior release of 234K. This trend of lower jobless claims suggests that the labor market conditions may not be as dire as previously indicated.
Investors remain optimistic about the near-term outlook for Silver as they anticipate the Federal Reserve (Fed) to begin reducing interest rates starting from the September meeting. However, the strong US data has tempered expectations for aggressive policy easing by the Fed.
Technical Analysis of Silver Price
Following a negative divergence formation on a four-hour timeframe, the Silver price has bounced back. The 14-period Relative Strength Index (RSI) rebounded from 24.00 without dropping below the previous low of 20.00. If Silver breaks above the immediate swing high from August 2 at $29.23, the aforementioned formation will be triggered.
The asset is currently above the 20-period Exponential Moving Average (EMA) near $27.80, indicating a positive near-term trend. The 14-period RSI is close to 60.00, and a decisive break above this level could signal further upside momentum.
Four-Hour Chart Analysis
Silver FAQs
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Overall, the drop in Silver price can be attributed to the strong US economic data, which has boosted the US Dollar and bond yields. This shift in market dynamics has implications for investors holding Silver as part of their portfolio, as it underscores the interconnectedness of various economic indicators and their impact on asset prices.