Market Cautious Ahead of Rate-Setting Meeting, Silver Prices Retreat After Rapid Rise [SMM Daily Review]

SMM’s 10:00 pricing for SGX Ag (T+D) was 13,992 yuan/kg today, with premiums quoted in a range of TD-5 to +5 yuan/kg and an average of 0 yuan/kg.

On the macro front, the suspension of mutual attacks between the US and Iran and rising expectations for negotiations drove a sharp drop in international oil prices, easing inflation concerns and cooling rate-hike expectations temporarily. However, the US dollar index staged a deep V-shaped rebound and ultimately closed higher, while US equities remained resilient. Ahead of the US Fed’s interest-rate decision early Thursday morning, the market turned cautious overall, limiting upside room for silver prices. The market’s expectations for the probability of a September rate hike rose somewhat. Precious metals have recently retreated after rapid rise, lacking sustained upward momentum.

In the spot market, today’s supply-demand double-weak pattern continued, and with month-end approaching, both domestic and overseas demand remained sluggish. Smelters made relatively large shipments last week, and overall willingness to participate in offering quotes was not strong this week. The downside in silver prices further dampened suppliers’ sentiment to sell, and transactions were average. In Shanghai, morning quotes were mainly at TD parity to +10 yuan/kg. Suppliers holding invoices for this month quoted relatively high, but with demand currently sluggish, invoice issues had limited impact on the market. In Shenzhen, some national-standard cargoes were largely quoted around TD-5 yuan/kg to parity. Although low-priced cargoes existed, they did not cause a notable disruption to spot trade. The spot-futures price spread fluctuated around 50 yuan/kg today, and the market quoted premiums for the SHFE most-traded contract 2610 at a discount of 55-50 yuan/kg.

Overall, with the US Fed meeting approaching, market sentiment was cautious. The upward momentum previously boosted by the pause in the US-Iran conflict was insufficient, and silver prices edged down today. In the spot market, the month-end supply-demand double-weak pattern continued, with transactions holding near parity.