Silver Rebounded in a V-Shape This Week, Gaining 8.47%; Double Bottom Pattern Emerged, Awaiting Breakthrough [SMM Silver Weekly Review]

[Silver Price Review and Forecast]

This week, the SMM 1# silver price posted a V-shaped reversal, falling first and then rising. Last Friday, hit by hawkish remarks from the US Fed and escalating geopolitical conflicts, silver prices dipped to the weekly low of 13,417 yuan/kg. They then rebounded for three consecutive trading days, driven by a marginal cooling in rate-hike expectations, rising expectations for US-Iran ceasefire talks, and demand for technical repairs, reaching the weekly high of 14,589 yuan/kg on Wednesday. Today, silver prices moved sideways, up about 8.47% cumulatively for the week, with a weekly trading range of 13,417-14,589 yuan/kg. The pace of the move resonated strongly with macro sentiment, and silver’s elasticity was particularly evident during the rebound.

On the macro front, overall headlines lacked sustained momentum, and sentiment fluctuated repeatedly. Last Friday, US Fed’s Logan delivered hawkish remarks, saying rates needed to rise further to address elevated inflation. Coupled with the continued escalation of the US-Iran military conflict, rate-hike expectations stayed high, putting silver prices under pressure and triggering a breakdown decline; SHFE silver plunged 3.66% in a single day. Entering this week, macro pressure eased notably. The US-Iran situation showed signs of de-escalation: Iran said mediators proposed a 10-day ceasefire, and US Secretary of State Rubio said he remained open to a diplomatic solution. International oil prices pulled back in tandem, easing earlier inflation concerns driven by energy; meanwhile, Trump was set to impose new tariffs on dozens of countries as early as within the week, intensifying global trade frictions. Together with a rebound in Asia-Pacific equities that lifted risk appetite, pent-up oversold-rebound sentiment was released in a concentrated manner, and SHFE silver surged sharply for two consecutive days. Today, risks from the US-Iran military conflict have yet to be removed, and the US has not shown willingness to negotiate peace; silver prices consolidated and held steady, and the durability of the market’s logic shift remains to be seen.

In the spot market, premiums maintained a narrow sideways move around parity this week, with the pattern of weak supply and weak demand continuing. In Shanghai, quotes were concentrated at TD parity to +5 yuan/kg. Suppliers showed relatively low willingness to quote discounts, while downstream buyers mostly preferred negotiated deals; actual transactions remained sluggish. After silver prices rebounded mid-week, follow-on buying from consumption was insufficient, and the transaction center continued to skew toward parity. In Shenzhen, some national-standard cargo traded around TD -5 yuan/kg to parity, with some rigid-demand orders underpinning deals. In the second half of the week, as month-end approached, smelters’ willingness to sell increased. Along with a narrowing spot-futures price spread, traders’ selling sentiment rebounded. Overall transactions recovered somewhat versus early week, but end-use consumption remained weak.

Looking ahead, focus can be placed on changes in open interest in both domestic and overseas markets and on futures price action. Silver has preliminarily formed a double-bottom pattern; if it effectively breaks above the neckline at $63/oz, it may be poised to start a new upcycle. From the macro perspective, attention is still needed on the direction of rate-hike expectations, as the market currently lacks stronger signals for guidance. On the spot side, it is recommended to closely monitor suppliers’ selling pace and whether the import window reopens.

Next week’s price range: for SGE futures, 13,300 yuan/kg on the downside and 15,800 yuan/kg on the upside; for LBMA futures, $55/oz on the downside and $65/oz on the upside. For spot premiums, the market expects TD quotes to run around parity. This week, the SMM silver ingot Hong Kong spot premium (vs. LBMA) stayed at a discount of $0.3 to $0.2/oz, continuing to recover overall, but the profit margin for processing-trade exports narrowed somewhat.

[Weekly Silver Data Commentary]

Weekly inventory: as of July 23, SMM total social inventory stood at 3,436 mt, down 84 mt WoW (July 16). Among this, warrant inventory at the Gold Exchange saw destocking of about 122 mt last Friday versus the prior period, possibly related to banks’ operations of registering and withdrawing registered warrants; overall changes in spot inventory were relatively small. In international markets, both LBMA and COMEX inventories continued to show inventory buildup.

As of July 22, silver ETF open interest stood at 15,066 mt, up 22.49 mt WoW (+0.68% MoM) and up 0.52% MoM. The LBMA gold/silver ratio recorded 70, maintaining a consolidating trend this week.