Silver Price Forecast: XAG/USD surrenders some intraday gains after upbeat US data

• Silver price drops from intraday high of $28.44 after resilient US Retail Sales data for July.
• Back-to-back decline in US jobless claims suggest that labor market conditions are not as worse as it was anticipated.
• Strong US Retail Sales have prompted a strong recovery in the US Dollar and bond yields.

Silver price (XAG/USD) gives up some of its intraday gains in Thursday’s New York session after the release of the resilient United States (US) Retail Sales data for July and lower-than-expected number of individuals claiming jobless benefits for the first time in the week ending August 9.

The white metal struggles to hold the crucial support of $28.00 as upbeat US data has boosted the US Dollar (USD) and bond yields. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, bounces back above 103.00. 10-year US Treasury yields soar to near 3.96%. Higher yields on interest-bearing assets weigh on non-yielding assets, such as Silver, by increasing the opportunity cost of holding investment in them.

The Retail Sales, a key measure of consumer spending, returned to expansion and rose at a robust pace of 1% from the estimates of 0.3%. Meanwhile, Initial Jobless Claims came in in lower at 227K than estimates of 235K and the prior release of 234K, upwardly revised from 233K. This is the second consecutive time when number of jobless claims have come in lower than expectations, suggesting that labor market conditions are not as bad as they were indicated by the Nonfarm Payrolls (NFP) data for July.

Meanwhile, the near-term outlook of the Silver price remains firm as investors remain confident that the Federal Reserve (Fed) will begin reducing interest rates from the September meeting. However, upbeat data have dashed hopes the Fed will adopt an aggressive policy-easing stance.

Silver technical analysis

Silver price bounced back after a negative divergence formation on a four-hour timeframe, which shapes when the momentum oscillator refuses to make lower lows, while the asset continues that formation. The 14-period Relative Strength Index (RSI) rebounded from 24.00 without hitting downside below previous low of 20.00.

However, the above-mentioned formation would trigger if the white metal breaks above the immediate swing high plotted from the August 2 high of $29.23.

The asset stays above the 20-period Exponential Moving Average (EMA) near $27.80, suggesting that the near-term trend has leaned on the upside.

The 14-period RSI has bounced back to near 60.00 and a decisive break above the same will trigger the upside momentum.

Silver four-hour chart