After a subdued Asian session, silver spiked higher in New York and held daily gains on shifts in risk appetite and quarter-end positioning, although prices ended well off daily highs.
Silver consolidated in a relatively narrow $19.10-19.20 range in Asian trading on Friday with generally weak Japanese data keeping a solid dollar tone.
Prices moved higher in Europe on fresh concerns surrounding the European financial sector amid a renewed focus on Deutsche Bank. As equities came under fresh pressure and there was renewed demand for defensive assets, silver moved higher to the $19.30 area.
US personal spending was slightly weaker than expected at unchanged for August after an upwardly-revised 0.4% increase for July. Personal income was in line with expectations at 0.2% and the annual core PCE price index rose to 1.7% from 1.6% previously, edging closer to the 2.0% Fed target.
The Chicago PMI index was stronger than expected with an increase to 54.2 for September from 51.5 previous with the third-quarter reading the strongest since the end of 2014. The revised University of Michigan consumer confidence data was also stronger than expected at 91.2 from 89.8 previously.
During the US session, there were reports that fines on Deutsche Bank from the US Department of Justice could be lower than expected. This was important in underpinning risk conditions and also helped pull the dollar weaker against the Euro. The dollar’s trade-weighted index eventually turned slightly negative which bolstered silver support.
There was very choppy silver trading the US session with a rapid spike to highs just above the $19.70 level. Wider volatility was a factor and higher energy prices also offered support to silver. There was an equally rapid slide back to $19.30 as US yields moved higher, although significant quarter-end positioning was a key factor behind both the spike higher and subsequent reverse.
The latest COT data will be watched closely over the weekend for further evidence on underlying positioning with the US data releases watched very closely next week.