[Silver Price Review and Forecast]
This week, the SMM #1 silver price moved steadily and sharply higher. After a mild high opening at the start of the week, it accelerated; on Wednesday, SHFE silver surged over 7%, with a weekly cumulative gain of about 7.08%, hitting a high of 15,167.5 yuan/kg.
On the macro front, early in the week, the official launch of US-Iran talks, rising expectations for the reopening of the Strait of Hormuz, and OPEC+’s small hike in production quotas caused oil prices to pull back sharply, easing inflation concerns marginally. However, hawkish Fed officials continued to speak, and the high-interest-rate stance saw no fundamental shift, capping upside room for silver. Mid-week, market sentiment was fully unleashed, compounded by ADP employment data missing expectations significantly and marking the smallest gain so far this year; expectations for non-farm payrolls were revised down accordingly, rate hike expectations pulled back further, the US dollar weakened, and silver prices surged. Toward the end of the week, the macro direction remained unclear, the market turned cautious ahead of the non-farm payrolls release, and silver consolidated at highs. Overall, next week’s silver macro backdrop is expected to remain a mixed bullish-and-bearish pattern.
Spot market, the supply-demand weakness pattern extended this week, with a clear divergence of rising silver prices and shrinking demand. Trading was sluggish at the start of the month. In Shanghai, premiums/discounts centered around TD parity to +10 yuan/kg; trader offers mostly leaned toward a discount of 50–55 yuan/kg against the SHFE silver 2610 contract. Transactions among smelters and downstream were concentrated at TD parity to +5 yuan/kg. After silver prices strengthened, downstream purchase willingness was further dampened, new orders were limited, and transactions relied mainly on bank institutions for support, with actual deals tending toward parity.
Looking ahead, the silver market has again exhibited a double-bottom pattern, and overall sentiment leans optimistic. Weakening US economic data and persistent market concerns over a US debt crisis are providing medium- to long-term support for silver. However, the recent extreme macro information stimulus is unlikely to persist, and repeated US-Iran conflicts and hawkish Fed interpretations could create bearish pulls again next week, making it difficult for silver to sustain gains; capital flow remains generally cautious. This Friday’s non-farm payrolls data may briefly set market direction, but the long-term expectation of rate hikes has yet to reverse, and the foundation for a sustained rise in silver prices remains weak.
For the price range next week, the low on the SGE is seen at 14,100 yuan/kg and the high at 15,600 yuan/kg; on the LBMA, the low is seen at $58/oz and the high at $68/oz. As for spot premiums/discounts, TD quotes are expected to hover around parity or a slight premium. This week, the SMM silver ingot spot premium in Hong Kong (against LBMA) closed at a discount of $0.4–0.2/oz; processing trade export profit and loss fluctuated significantly, smelters showed a strong wait-and-see sentiment, and inventory pressure in Hong Kong remained.
[Silver Weekly Data Commentary]
In terms of weekly inventory, as of August 6, SMM total social inventory stood at 3,625 mt, destocking by 33 mt from the previous period. Of this, SGE warrant inventory decreased by 131 mt from the previous period, roughly matching the scale of the SHFE warrant buildup last week, when the wide basis triggered some position rolling. This week, SHFE warrant inventory increased by about 80 mt, and spot inventory saw slight growth across the board. The overall reason remains poor spot market consumption and the recent stagnant spot-futures spread, making it somewhat difficult for traders to sell. Internationally, both LBMA and COMEX inventories continued their buildup trend.
As of August 5, silver ETF holdings stood at 15,130 mt, up 0.5% WoW and 0.96% MoM, reflecting relatively cautious capital. The LBMA gold/silver ratio recorded 68, oscillating downward. Silver displayed greater elasticity in this rally.
