Saad Ullah
Silver (XAG) trades above $28 as investors await U.S. retail sales data, with potential for a move towards $29.21 if economic conditions align.
XAG Holds Firm as Key Economic Data Looms
Silver prices have stabilized above a critical pivot point at $27.85, showing resilience after a recent downturn. On Thursday, XAG/USD traded at $28.06, marking a $0.50 or 1.81% increase, as investors look ahead to crucial economic reports. The 50-day moving average of $29.21 is now in focus, a level that could be reached if upward momentum continues. The market's reaction follows a 1.04% decline in the previous session, triggered by U.S. consumer inflation data that reduced hopes for a significant interest rate cut by the Federal Reserve.
The U.S. Consumer Price Index (CPI) data released on Wednesday showed a modest increase in July, with annual inflation dropping below 3% for the first time since early 2021. While this data supports the possibility of a rate cut, it also suggests that a substantial reduction is unlikely. This led to a short-term sell-off in silver as traders recalibrated their expectations for aggressive monetary easing. However, some market participants considered this response overly bearish, which helped silver prices recover during the Asian trading session.
XAG Market Eyes U.S. Retail Sales and China’s Economic Challenges
Investors are now focusing on the U.S. retail sales data due on Thursday, which is expected to show a 0.3% increase for July. A strong report could further dampen hopes for a significant rate cut, potentially capping silver’s upside. Additionally, ongoing concerns about China's economic slowdown add complexity to the market. July data revealed mixed results, with industrial output slowing to 5.1% growth while retail sales improved by 2.7%. Despite signs of recovery in consumer spending, the broader economic outlook in China remains uncertain, particularly in the property and industrial sectors.
Given the mixed economic signals from the U.S. and China, silver prices are likely to remain volatile in the short term. A technical move towards the $29.21 level is possible, but much will depend on the strength of upcoming U.S. economic data. The market’s reaction to the retail sales figures, alongside concerns about China’s economic health, will play a critical role in determining whether silver can sustain its current momentum or faces renewed downward pressure. Over the longer term, geopolitical risks and central bank demand for precious metals continue to provide a cautiously bullish outlook for silver.
Technical Analysis: XAG/USD Near Key Resistance Levels
XAG/USD is currently trading above the pivot point at $28.15, suggesting strength in the market. If buyers can maintain this momentum, silver could surge towards the 50-day moving average at $29.21, followed by another pivot at $29.50. Breaking through these resistance levels could pave the way for an advance toward the main tops at $31.76 and $32.52. Conversely, falling below the pivot could lead to renewed selling pressure, potentially testing the 200-day moving average at $26.20.
In conclusion, silver (XAG) remains at a pivotal point as it navigates mixed economic signals from the U.S. and China. The metal's short-term trajectory hinges on upcoming U.S. retail sales data and ongoing concerns about China's economic slowdown. While a move toward $29.21 is possible, the outcome will largely depend on the strength of these economic indicators. Investors should stay vigilant as silver's path forward could be shaped by these critical developments, with potential for both upside gains and renewed selling pressure.
Saad Ullah
