Silver Price Prediction: XAG/USD falls below the 200-day moving average after US Retail Sales

Silver price dropped for the second consecutive day, leaving the 200-day Exponential Moving Average (EMA) at $21.93 in the rearview mirror, as the Commerce Department reported that Retail Sales increased. The statistics supported a resurgence of the US Dollar (USD), putting downward pressure on Silver.

At the time of writing, the XAG/USD is trading at $21.50, having reached a peak of $21.87.

The XAG/USD exchange rate continues to decline, driven down by the strength of the US dollar, which, supported by rising US Treasury bond yields, advances 0.64 percent to 103.93 on the US Dollar Index. The 10-year US Treasury bond yield has increased by three and a half basis points to 3.772%, which is negative for the non-yielding metal.

After two consecutive months of decline, January retail sales in the United States increased by an astounding 3.0% month-over-month versus expectations of 1.8%. The majority of the increase in sales can be linked to a tight labor market, which continues to create robust pay growth, while rising fuel prices may have contributed to a rise in revenues at service stations.

Recent Industrial Production (IP) in the United States remained constant, as reported by the US Federal Reserve (Fed), but output was weaker than anticipated due to increasing borrowing rates in the manufacturing industry.

The US Federal Reserve may continue to tighten monetary conditions, with markets anticipating two additional 25-bps rate hikes, which would push the Federal Funds Rate (FFR) to the range of 5.00% to 5.250%.

A spate of Fed members remarked on Tuesday that the Fed is not done raising interest rates and echoed Fed Chair Powell's statement that rates will remain "higher for longer."

Consequently, Silver prices will stay under pressure, as a robust US Dollar will continue to harm the white metal. Silver could experience a rise once the Federal Reserve halts its tightening cycle, as it is expected to do so until 2024. Nonetheless, a hawkish Fed would boost the US Dollar's short-term prospects, which would impact on Silver.