Silver (XAG) Forecast: Will Retail Sales Data Give Silver the Boost to Challenge $31.81?

Can Silver Sustain Its Momentum Ahead of U.S. Retail Sales Data?

Silver prices are inching higher Thursday, supported by technical strength and softer inflation data. After breaking above the 50% Fibonacci retracement at $30.53 and surpassing the 50-day moving average at $30.45, silver gained upside momentum.

These technical levels open the door for a move toward $31.81, followed by the December 12 peak at $32.33. A breakout above this level could ignite a rally toward $34.35-$35.40, where strong resistance at $34.87 may come into play.

At 11:53 GMT, XAG/USD is trading $30.81, up $0.14 or +0.44%.

Today’s U.S. Retail Sales report could be pivotal in determining whether silver can maintain its recent momentum or face near-term resistance.

Will Retail Sales Data Push the Dollar and Cap Silver’s Upside?

The U.S. Retail Sales report, scheduled for release at 13:30 GMT, will be closely watched for its impact on the U.S. dollar and precious metals. Core Retail Sales, excluding autos, are expected to rise by 0.5%, while the broader Retail Sales figure is forecasted at 0.6%.

Higher-than-expected results could strengthen the dollar, potentially pressuring silver prices. On the flip side, weaker sales data could dampen economic confidence, weakening the dollar and bolstering silver’s safe-haven appeal.

The report’s release comes as markets assess softer U.S. inflation data, which renewed hopes for Federal Reserve rate cuts later this year.

Does Cooling Inflation Solidify Rate Cut Bets?

On Wednesday, U.S. core inflation data showed signs of easing. Core CPI rose 3.2% year-over-year in December, slightly below the 3.3% forecast, while monthly core inflation grew by just 0.2%, missing expectations by 0.1 percentage point. The broader consumer price index rose 0.4% on the month, matching forecasts.

The softer inflation figures strengthened the market’s conviction that the Fed’s rate hike cycle is over. Interest rate futures now reflect near-even odds of two rate cuts by the end of this year, with the first potentially in June. A more dovish Fed outlook reduces the opportunity cost of holding non-yielding assets like silver, supporting its appeal.

Geopolitical Easing and Treasury Yields: How Are They Impacting Silver?

Silver’s safe-haven demand eased slightly after Israel and Hamas agreed to a ceasefire and hostage deal. This follows a surge in silver prices last year, fueled by geopolitical tensions and expectations of central bank easing.

Additionally, U.S. Treasury yields remained subdued after inflation data failed to signal a resurgence in price pressures. The 10-year yield stayed flat Thursday morning, further pressuring the dollar and providing tailwinds for silver prices.

Outlook: Can Silver Break Higher, or Will Data Disappoint?

Silver is positioned for further gains if today’s Retail Sales data misses expectations, which would likely weaken the dollar and drive safe-haven demand. However, stronger-than-expected retail figures could strengthen the dollar and stall silver’s rally near current levels.

With key resistance levels at $31.81 and $32.33 within reach, silver traders should watch today’s data closely. A breakout above $32.33 could trigger a sharp move toward $34.35-$35.40, but upside momentum remains tied to the trajectory of U.S. economic data and the Fed’s rate policy.

More Information in our Economic Calendar.