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David Becker
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Silver prices dropped sharply on Friday following a robust U.S. Retail Sales report. The dollar edged higher weighing on silver and generating headwinds for the entire precious metals complex.  U.S. Yields moved higher but failed to gain significant traction despite a much stronger than expected U.S. retail sales report.  For the week silver prices were down approximately 1.4%. The U.S. Commerce Department reported that U.S. Retail sales increased by 0.6% month over month. Had been for U.S. retail sales to fall by 0.3%.

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Technical analysis

Silver prices dropped sharply on Friday breaking through trend line support and headed to a horizontal support line seen near 25.55. A break of this level would lead to a test of the March lows at 25.55. Resistance is seen near the 20-day moving average at 20.06.  Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. The fast stochastic has moved lower printing a reading of 11, well below the oversold trigger level of 20 which foreshadows a correction. Medium-term positive momentum is decelerating as the MACD histogram is printing in negative territory with a sliding trajectory which points to consolidation.

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Retail Sales Surge

Retail sales rose 0.6% last month. Expectations were for retail sales to decline by 0.3%. Sales surged 18.0% year over year. Excluding automobiles, gasoline, building materials and food services, retail sales increased 1.1% last month. Core retail sales correspond most closely with the consumer spending component of gross domestic product.

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