Silver dips as dollar pulls higher ahead of the weekend

Silver futures slipped away from two-week highs as the dollar index steadied higher, following earlier data from the US, the world's largest economy, and after global central bank governors hinted at possible tightening of monetary policies to come. 

As of 08:02 GMT, silver futures due on September 15 shed 0.23% to $16.615 an ounce from the opening of $16.654, while the dollar index rose 0.07% to 95.70 from the opening of 96.63, marking a nine-month trough. 

Earlier US data showed personal income rising 0.4% last month, up from 0.3% in April, while personal spending slowed down to 0.1%, matching expectations and compared to a 0.4% growth in the previous reading. 

Chicago PMI rose to 65.7 in June, the best reading since October, 2014, and up from 59.4 in May, while analysts expected a dip to 58.1. 

The Revised reading for the University oh Michigan Consumer Sentiment survey beat expectations in June, while economic expectations fell as economic conditions rose, and one-year inflation expectations steadied at 2.6%, while rising to 2.5% from 2.4% for five-year inflation. 

Earlier this week,  global central bank governors participated in a panel discussion at the European Central Bank Forum on Central Banking, in Portugal, including ECB President Mario Draghi, BOE Governor Mark Carney, BOC Governor Stephen Poloz, and BOJ Governor Haruhiko Kuroda.

Draghi noted that all growth indicators for euro zone economies are above average, pointing to some evidence of accelerated growth, while asserting the ECB will follow a gradual path when attempting to change the monetary policy when the time comes, noting that inflationary pressures remain unsustainable, therefore the current monetary easing policy will carry on as the recovery continues. 

These remarks were priced in by the markets as bullish and an indicator for policy tightening soon, and maybe a trimming down of the asset purchase program by September, but several statements from ECB sources today asserted that markets misunderstood Draghi yesterday as he pointed to weak inflationary pressures. 

Carney talked about the risks facing financial stability due to Brexit, adding that inflation is currently above the BoE's 2% target in only a temporary way, while expecting policy tightening if economic conditions stabilized enough to allow for such a change. 

Carney pointed to the clear disparity between consumer spending and business investments, while saying it's still too early to ascertain how much the economy slowed down, and whether it will continue to slow down or not, adding that the BoE might reverse its current easing measures gradually, while allowing inflation to pass 2% for the time being. 

On the other hand, Kuroda talked about weak investments as a commonplace phenomenon in recovery stages despite strong profits, while pointing to the persistent caution within companies, and noting the slow growth for wages in Japan despite huge easing stimuli, while monetary policy could support structural reforms.  

Bank of Japan member Harada said BoJ needs to tighten the policy in some stage, even though he's not sure when, while adding there's no doubt about the central bank's ability to exit the easing program with no difficulty, while pointing to the yen's weakness as a propellant for economic growth and higher prices.

Bank of Canada Governor Poloz said that the policy of cutting interest rates adopted by most global central banks after the last crisis bore fruit in the markets, while expecting forecast-beating growth in Canada despite the uncertainty regarding the coming talks about the North America Free Trade deal (NAFTA) in August.  

Federal Reserve Governor Janet Yellen ruled out another financial crisis at least in her life, due to the baking reforms made after the 2007-2008 banking collapse, while saying it would be good if reforms made since the last crisis carried on. 

Yellen urged those who helped overcome the crisis back then to work hard to prevent any loosening of these reforms, while asserting the Federal Reserve will continue tightening its monetary policy gradually, and trim down its holdings of treasury bonds and mortgage-backed securities collected after the last crisis to underpin the economy.