Silver Price Forecast Ahead of FOMC Minutes, US Retail Sales

Silver price retreated slightly on Monday morning as investors focused on the latest industrial production data from China. It dropped to a low of $20.63, which was slightly below this month’s high of $21. This price is about 14% above the lowest level this year. It is also close to the highest level since June. Other precious metals like gold and palladium also pulled back.

China industrial production data

Silver is both a precious and industrial metal. As a result, its price is usually affected by both monetary policy issues and economic data. According to the National Bureau of Statistics (NBS), China’s industrial production dropped slightly from 3.9% to 3.8% in July. This decline was slightly lower than what analysts were expecting. Production rose by 3.5% year-to-date. 

Additional data revealed that China’s unemployment rate dropped from 5.5% to 5.4%, while retail sales fell from 3.1% to 2.7%. Moreover, further data showed that China’s fixed asset investments declined from 6.1% to 5.7%. All these numbers are signs that the Chinese economy is struggling. This explains why the country’s central bank decided to slash interest rates on the medium-term lending facility.

The next key catalyst for silver price will be the upcoming Federal Open Market Committee (FOMC) minutes scheduled for Wednesday. These minutes will provide more colour about the state of the American economy and the next actions by the Fed. 

Most Federal Reserve officials like Mary Daly, Charles Evans, and Neel Kashkari have insisted that the Federal Reserve will continue hiking interest rates even as inflation retreats. Silver price will also react to the latest US industrial and manufacturing production data.

Silver price forecast

The four-hour chart shows that silver price has been in a strong bullish trend in the past few weeks. In this period, it has moved from a low of $18.33 to a high of $21. The 25-day and 50-day moving averages are supporting the price. However, the Relative Strength Index (RSI) has formed a bearish divergence pattern.

Therefore, there is a likelihood that the XAG/USD price will pull back as sellers target the key support level at $19.57. This view is in line with my previous silver prediction.

A move above the resistance at $21 will invalidate the bullish view. Find an updated silver price forecast in our InvestingCube S&R indicator.

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