Consumer Inflation Dips, Retail Sales Next
Silver showed a muted response to the January U.S. consumer inflation reports, which were within expectations. Still, there is concern over the persistent low levels of inflation. The headline release dipped to 0.1%, its lowest level in five months. Although the Federal Reserve continues to signal that it has no plans to trim interest rates, policymakers will have to consider a cut if inflation remains barely above the zero level.
We’ll get a look at January retail sales on Friday at 13:30 GMT. The indicator is expected to remain unchanged at 0.3%. However, core retail sales, which posted a strong gain of 0.7% in December, is forecast to fall to 0.3%. Any unexpected readings could trigger some movement in silver prices.
Powell Signals No Rate Cuts Are Imminent
On Wednesday Powell outlined to the Senate Banking Committee his strategy in case of a financial crisis. Powell said that the Fed had two tools to fight a recession – quantitative easing, which involves large purchases of assets, and forward guidance, which means communicating with the markets about the likely future course of interest rate policy. Powell said that he believes that the Fed would use both these tools “aggressively should the need arise to do so”. Under Powell’s leadership, the Fed cut rates three times last year to snuff out any recessionary trends in the economy, but with rates currently at a range of 1.50-1.75%, there isn’t much more room to keep cutting.
Silver Technical Analysis
Silver continues to trade in a narrow range between 17.50 and 18.00. The round number of 18.00 continues to show resilience as a resistance line. Above, we find resistance at 18.60. On the downside, the 50-day EMA is currently situated at 17.64 and is touching the candlesticks. 17.50 remains a weak support line. Below, there is support at the round number of 17.00, followed by the 200-EMA line at 16.99.