- Silver price sacrifices some of its intraday gains as the US Dollar recovers strongly.
- Better-than-expected US Retail Sales Control Group data has resulted in the US Dollar’s recovery.
- Firm Fed rate-cut prospects keep the Silver price’s outlook strong.
Silver price (XAG/USD) surrenders a majority of the gains and drops to near $30.50 in Tuesday’s American session. The white metal drops as the US Dollar (USD) recovers after the United States (US) Retail Sales report for June exhibited a better performance than market consensus.
Monthly Retail Sales remained flat, as expected, but May’s reading was upwardly revised to 0.3% from 0.1%. Retail Sales Control Group, a key measure to consumer spending component of Gross Domestic Product (GBP) that excludes receipts from auto dealers, building-materials retailers, gas stations, office supply stores, mobile home dealers and tobacco stores, rose at a stronger pace of 0.9% than the former release of 0.4%.
A slightly better Retail Sales report has improved the US Dollar’s appeal. However, the pace at which core Retail Sales have grown is incapable of reversing the disinflation process.
The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, jumps to near 104.50. Higher US Dollar makes the Silver an expensive bet for investors.
On a broader note, the Silver price remains firm amid strong speculation that the Federal Reserve (Fed) will start reducing interest rates from the September meeting. Market expectations for Fed rate cuts rose sharply after the Consumer Price Index (CPI) report for June showed that price pressures decelerated at a faster-than-expected pace.
Silver technical analysis
Silver price turns sideways in a range between $30.40-$30.80 for more than one week. The near-term outlook of the Silver price remains firm as the asset holds the breakout of the Falling Channel formation on a four-hour timeframe.
The 50-period Exponential Moving Average (EMA) near $30.70 continues to provide support to the Silver price bulls.
The 14-period Relative Strength Index (RSI) oscillates inside the 40.00-60.00 range, exhibiting indecisiveness among market participants.
Silver four-hour chart
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD retreats below 1.0900 after US data
EUR/USD stays under modest bearish pressure and trades below 1.0900 in the second half of the day on Tuesday. The US Dollar holds its ground following the Retail Sales data for June, making it difficult for the pair to regain its traction.
GBP/USD loses traction, drops to 1.2950 area
GBP/USD struggles to keep its footing and trades in negative territory at around 1.2950 in the American session. June Retail Sales data from the US helps the US Dollar stay resilient against its rivals, not allowing the pair to build on previous week's gains.
Gold reaches fresh record highs above $2,460
Following a short-lasting correction in the early American session, Gold gathers bullish momentum and trades a new all-time high above $2,450. The benchmark 10-year US Treasury bond yield stays in the red near 4.2%, fuelling XAU/USD's rally.
Crypto Today: Bitcoin, Ethereum and XRP rally as meme coins PEPE, WIF, FLOKI make double-digit gains
Bitcoin resists sell-off even as news of Kraken exchange users gearing to receive Mt.Gox transfers makes headlines. The largest asset by market capitalization sustained above key support and trades above $63,800 on Tuesday.
ECB bank lending survey shows only modest pickup in expected loan demand
While the economy has returned to growth and interest rates are coming down, loan demand is only modestly improving as bank credit standards remain tight. For the ECB, there is nothing in the data that moves the needle for coming rate cuts.