Silver price reacts subtly to US retail sales; here’s why

Silver price is trading sideways even after the release of the US retail sales. The precious metal remains below $24 as investors await further cues from Jerome Powell’s speech.

US inflation data

The market is reacting to the lower-than-expected US retail sales. Data released on Tuesday afternoon showed that retail sales dropped by 1.1% in July MoM. Analysts expected sales to have declined by 0.3% after a rise of 0.6% in the previous month. With the exclusion of the volatile food and energy components, core CPI is at -0.4% compared to the predicted 0.1% and the prior month’s 1.6%.

The data comes days after the lower-than-expected CPI numbers. Last week, data from the US Bureau of Labor Statistics showed that the core CPI rose by 0.3% in July compared to the forecasted 0.4% and the prior month’s 0.9%. With the inclusion of volatile components, consumer prices matched experts’ expectations of 0.5%, but remained lower than the previous 0.9%.

On the one hand, the numbers eased inflation fears; triggering a decline of 0.78% as the week came to an end. However, the heightened safe-haven appeal of the US dollar has triggered a rebound. At the time of writing, the dollar index was up by 0.24% at 92.83. As concerns regarding inflation and the Delta variant continue to catalyze silver price movements, Jerome Powell’s speech on Tuesday will further impact the prices.  

Silver price technical outlook

Silver price is consolidating below the crucial level of 24.00 even after the release of US retail sales. At the time of writing, the precious metal was up by 0.01% at 23.84. Since plunging to its lowest level year-to-date a week ago, it has held steady above the support level at 23.00.

Notably, 23.41 has offered support since Friday. On a three-hour chart, it is trading slightly above the 25 and 50-day exponential moving averages. In the near term, I expect silver price to find support along the 25-day EMA at 23.41.

As a reaction to the Jerome Powell’s speech, the precious metal is likely to rise to the prior support-turn-resistance level of 24.19. Above that level, the next target will be at 24.50. On the flip side, a move below the 25-day EMA at 23.70 will probably place the support at 23.41 or lower at the psychological level of 23.00.