Silver Price Forecast: XAG/USD dwindles and cracks below the 200-DMA, after US Retail Sales Silver XAGUSD Metals Macroeconomics Technical Analysis
from the Commerce Department revealed that Retail Sales improved. Therefore, the US Dollar it’s making its case for a comeback. At the time of writing, the XAG/USD exchanges hands at $21.50 after hitting a high of $21.87.The XAG/USD continues to dive, weighed by the strength of the greenback, which, underpinned by rising US Treasury bond yields, advances 0.64%, at 103.93, per. The 10-year US Treasury bond yield is up three and a half bps, up at 3.772%, a headwind for the non-yielding metal.
US Retails Sales for January jumped by an astonishing 3.0% MoM vs. estimates of 1.8% by analysts after two consecutive months of shrinkage. The increase in sales it’s mainly attributed to a tight labor market, which continues to generate strong wage growth, while higherOf late, Industrial Production in the US remained unchanged, as reported by the US Federal Reserve , while output was weaker than foreseen, spurred by higher borrowing costs in the manufacturing sector.
Given the backdrop, the US Federal Reserve might continue to tighten monetary conditions, with markets estimating two additional rate hikes of 25 bps, which would drag the Federal Funds Rate to the 5.0%-5.25% range. On Tuesday, a slew of Fed policymakers commented that the Fed is not done hikingand emphasized what Fed Chair Powell said, that interest rates would remain “higher for longer.”
Hence, Silver prices would remain pressured, as a strong greenback would continue to hurt the white metal prospects. With the Federal Reserve set to cut rates until 2024, the white metal could see a bounce once the Fed pauses its tightening cycle. Nevertheless, a hawkishAfter dropping beneath the 200-day EMA, XAG/USD might extend its fall toward the November 28 swing low at $20.87, followed by November 21 at $20.59. A breach of those demand areas, and, might head to the $20.
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