Silver (XAG/USD) price continues to follow a downward trend. Yesterday, the safe-haven asset bounced off from the key support level of $22.14, which was also its new monthly low. The precious metal is currently trading at $22.65.
The DXY, which measures the dollar’s strength against five global currencies, has been on a roll for the past few weeks. The dollar index has risen 3.2% above its previous monthly low and is currently retesting the 200 MA. Due to the inverse correlation between DXY and metals, the price of silver slid by 10% during the same time.
Further Rate Hike Expected Due To Strong Sales Data
On Tuesday, the US Census Board reported a 0.7% increase in retail sales, compared to the forecasted 0.4%. This suggests that US consumers still have strong purchasing power. Therefore, investors expect more rate hikes this year which will further strengthen the dollar, reducing the demand for metals like silver.
The minutes of the FED meeting on July 25 will be released today at 2 pm (EDT). The investors are on their toes as the minutes will contain clues about the intentions of the Federal Reserve for another rate hike in the future. Gold has also slid by about 3.8% due to the strengthening US dollar.
Silver Price Consolidates Above Major Support
The chart for (XAG/USD) shows that the price bounced from a key support level which lies above $22. As most investors expect another rate hike, this could mean a further sell-off in precious metals.
If the price breaks below the $22.1 support level, the Silver price prediction will flip extremely bearish. In this event, the demand zone of $20.5-$21.3 could be the next target for the bears. For a bullish outlook, the price must respect $22.1 as a support level.
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