Silver Price Analysis: XAG/USD Seeks Tentative Support Near $22.40 Following Good Retail Sales Data

• Silver price seeks intermediate support as US Dollar strengthens following encouraging retail sales data.
• The strong momentum from consumer spending has boosted the inflation expectations of US consumers.
• The price of Silver forms a head and shoulders chart pattern, which is a trend reversal pattern.

The price of the Silver (XAG/USD) showed volatile action after the US Census Bureau reported that Retail sales data beat expectations. The white metal sought support near $22.40, but the outlook appears vulnerable as strong consumer spending momentum has boosted inflation expectations.

August retail sales expanded at a higher pace of 0.6% versus estimates of 0.2% and July’s reading of 0.5%. Economic data excluding autos rose at a slightly slower pace of 0.6% versus the previous reading of 0.7% while investors were anticipating a pace of 0.2%.

Additionally, the U.S. Department of Labor showed that first-time jobless filers increased by 220,000, while investors anticipated jobless claims rising by 225,000. In the previous week, unemployment benefits were recorded at 21,600. Jobless claims remained above the previous week’s figures after five consecutive weeks of declines.

The US Dollar Index (DXY) marks a new six-month high at 105.30, as strong retail demand could raise consumers’ inflation expectations and encourage Federal Reserve (Fed) policymakers to deepen inflation expectations. talks about a new increase in interest rates for the remainder of the year. The 10-year US Treasury yield rose sharply to 2.28%.

Silver technical analysis

The silver price forms a head and shoulders chart pattern on a daily scale, which is a trend reversal pattern. The neck line of the said chart pattern is drawn from the lows around 22.18 in June. The descending 20-period exponential moving average (EMA) indicates that the short-term trend is bearish.

The Relative Strength Index (RSI) (14) is moving towards the bearish range of 20.00-40.00, indicating that the bearish momentum has strengthened.

XAG daily chart