SHFE Silver Gained Over 3%, Platinum Rose More Than 2%; Precious Metals Sector Posted Second Straight Gain; Silver and Platinum Spot Markets Saw Strong Wait-and-See Sentiment [SMM Flash News]

SMM News, August 28:

On August 28, precious metals futures and equities posted broad gains. As of around 16:05 on August 28, COMEX gold rose 0.01% to $4,664.6/oz; the most-traded SHFE gold contract rose 0.08% to 999.28 yuan/g; COMEX silver rose 1.79% to $71.495/oz; the most-traded SHFE silver contract rose 3.15% to 17,215 yuan/kg; and silver T+D rose 2.78% to 17,180 yuan/kg. In addition, the most-traded platinum futures contract rose 2.19% to 462.95 yuan/g, and the most-traded palladium contract rose 4.37% to 329.75 yuan/g. In the stock market: as of the close on the 28th, the precious metals sector extended gains from the previous trading day, rising 1.33%. Among individual stocks, Hunan Gold rose 7.03%, and Xingye Silver&Tin, Sichuan Gold, and Chifeng Gold were among the leading gainers. In the morning session, precious metals traded generally weak amid risk-off caution. In the afternoon, US Treasury fiscal-risk trading re-emerged and the dollar trended weaker, prompting some market funds to re-enter and push futures higher. The rise in futures lifted miners' earnings expectations, driving the sector higher in tandem, while the market awaited policy signals from the Jackson Hole conference.

Spot Market

Silver

In the spot market, on August 28, the average ex-factory reference price of SMM #1 silver in the morning was 16,656 yuan/kg, down 1.39% from the previous trading day. Offers today were concentrated between a discount of 10 yuan/kg against TD and parity. At month-end, suppliers' willingness to sell was weak, and some enterprises that had cleared inventory suspended offers. The spot-futures price spread narrowed slightly, while actual transactions still carried small discounts; there were some inquiries from buyers that needed to replenish input VAT credits due to invoice issues. In Shanghai, morning offers were mainly around parity, while in Shenzhen, transactions generally carried small discounts and demand was relatively sluggish. Today's premium/discount quotes against the most-traded SHFE 2610 contract were at discounts of 55 to 45 yuan/kg.
Overall, precious metals stayed in choppy rangebound trading in the short term, and market wait-and-see sentiment was relatively heavy, awaiting clearer direction from Jackson Hole. In the spot market, selling sentiment at month-end was weak, low-priced supply was limited, and mainstream transactions remained at discounts.

Platinum

In the spot market, on August 28, the average spot price of platinum was 449 yuan/g, down 0.55% from the previous trading day. Mainstream platinum quotations were at discounts of 3.5-2.5 yuan/g against the PT2610 contract; suppliers' quoted discounts were basically flat compared with the previous trading day. Some suppliers sold at slight concessions due to pressure from factory warehouse warrant cancellations, and some enterprises made small purchases for cargoes with invoices dated this month. Downstream enterprises were still mainly wait-and-see, and consumption remained weak. Overall, transactions in the platinum spot market remained sluggish today.

Market Voices

Regarding the outlook for precious metals, views from several institutions are as follows:

OCBC Bank's Christopher Wong said the Jackson Hole conference would be the next key test for gold. Market attention was focused on Fed Chairman Warsh's speech, but since such speeches usually do not include a Q&A session, there was limited room for the market to seek clearer signals from him on September policy. However, traders might still scrutinize the speech for clues about the Fed's overall policy framework and how Warsh defines that framework, which could involve inflation persistence and forward guidance. “These factors could still affect the dollar, interest rates, market sentiment, and precious metals.” OCBC Bank remained bullish on gold because concerns about US fiscal credibility supported demand, but gold's failure to hold recent highs, combined with rebounding yields and a stronger dollar after stronger inflation data, meant that chasing gains was not advisable in the near term. (Jin10 Data APP)

Minmetals Futures believed that after the US July PCE data was released, market pricing for additional Fed rate hikes moved higher. In addition, tariff tensions between the US and Canada could create new upward pressure on inflation going forward. Against this backdrop, Warsh's remarks at the Jackson Hole global central bank conference could cause short-term volatility in precious metals prices.

Kelvin Wong, Senior Market Analyst at OANDA, said the narrative of dollar depreciation, together with concerns about the US budget deficit, continued to support gold over the medium term. The US Treasury earlier announced an expansion of its purchases of older long-term bonds, triggering concerns over dollar depreciation; gold prices rose more than 5% last week as a result. Wong added: “The market is waiting for Warsh's speech to get a clearer picture of how the Fed will respond to the current economic situation. If he does not provide specific forward-looking monetary policy guidance, the market's current pricing for rate hikes is likely to remain largely unchanged.” (Jin10 Data APP)

Citi raised its 0-3 month gold price target to $4,800/oz from $4,500/oz. It kept its 6-12 month target unchanged at $5,000/oz.

ING strategists said in a report that, supported by recovering investment demand and growing market unease about the US fiscal outlook, gold prices had rebounded sharply from July lows, from around $4,000 per troy ounce in mid-July to around $4,600, returning to levels last seen in May. The strategists said the prospect that the US Treasury might expand the scale of its Treasury buybacks had refocused market attention on US government borrowing and fiscal credibility issues. They added: “This has also renewed concerns about currency depreciation, further enhancing gold's appeal as a store of value.” (Jin10 Data APP)

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