XAG/USD rebounds to session highs at $21.60 after weak US retail sales data

  • Silver just hit a session high of $21.60 on Wednesday after weak US retail sales data ahead of the Fed’s announcement.
  • XAG/USD remains at risk of reversing intraday gains if the Fed delivers a hawkish surprise.

SPot silver (XAG/USD) prices surged to fresh session highs of $21.60 an ounce after the latest US retail sales report showed overall sales fell 1.3% in May after adjusting for inflation. The latest US data will no doubt lead to renewed negative revisions to Q2 GDP growth expectations, prompting renewed calls for US recession from analysts.

XAG/USD is now trading nearly 3.0% higher on the day after recovering from around $21.00, with recession fears seemingly supporting safe-haven precious metals for now. But whether this uptrend can continue into the upcoming Fed meeting remains to be seen. The US Federal Reserve is expected to hike interest rates by 75 basis points, making the inflation outlook and the so-called terminal interest rate outlook sound much, much more hawkish.

TAlthough this hawkish stance is arguably already largely priced in, precious metals such as silver remain at risk of suffering losses. The Fed’s hawkish stance is usually viewed as negative for precious metals as it is associated with a stronger US dollar and higher US yields, both of which tend to weigh on silver. XAG/USD may struggle to break above its 21-day moving average in the coming hours and the bears will eye a return to $21.00 amid a hawkish Fed surprise.

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