[Silver Price Review and Forecast]
This week, SMM 1# silver prices fell sharply, with the weekly chart posting a bearish candlestick and the price center moving significantly lower. Silver prices plunged at the start of the week, consolidated with a rebound mid-week, then fell again on Thursday before a modest recovery, with a cumulative weekly decline of nearly 800 yuan/kg, or about 5%.
On the macro front, the overall tone was bearish this week. On the bearish side, US August CPI rose 3.4% YoY and core CPI rose 0.3% MoM, both above expectations, pushing the market-implied probability of a 25 bp rate hike in September above 92%. Early Wednesday morning, the FOMC unanimously decided to raise rates by 25 bp to 3.75-4.00%, the first hike since July 2023, with 16 officials projecting at least one more hike this year. The US dollar index broke above the 100 mark, and the 2-year Treasury yield climbed to 4.744%, the highest since July 2024. Warsh stated that inflation is too high and has persisted for too long. On the bullish side, continued central bank gold purchases provided bottom support for precious metals, Trump publicly opposed rate hikes and called for rates to be cut to 1% or lower, creating room for policy maneuvering, and Middle East geopolitical premiums and elevated energy prices supported safe-haven demand. Throughout the week, the market focused on the FOMC rate hike and forward guidance, and after the meeting, silver prices showed a "bad news exhausted" style consolidative recovery.
In the spot market, quotes against TD maintained a small premium this week (premium of 2.5-3 yuan/kg), while the discount in Shanghai against the most-traded SHFE 2610 contract widened from 30-20 yuan/kg to around 50 yuan/kg. At the start of the week, the sharp drop in silver prices spurred some bargain hunting, suppliers showed greater willingness to sell, and bargaining room widened somewhat. Mid-week, ahead of the FOMC meeting, downstream players were largely in a wait-and-see mood, mostly purchasing as needed, with deals skewed toward the lower end of the quotation range. On the rate hike day, suppliers held quotes steady, but buying interest was weak and trading was thin. After the rate decision, downstream fear of high prices persisted and purchasing enthusiasm was muted. Overall trading activity was notably lighter WoW, with deals concentrated at small premiums to parity.
Looking ahead, with the Fed rate hike now delivered and the policy signal largely digested by the market, combined with ongoing central bank gold purchases and Middle East safe-haven premiums providing medium-term support, silver may see a window for sentiment repair in the near term. However, high interest rates and a strong US dollar remain headwinds, and a trend reversal still requires confirmation from more data.
For next week's price range, SGE futures are seen at a low of 15,300 yuan/kg and a high of 16,200 yuan/kg; LBMA futures are seen at a low of $62/oz and a high of $66/oz. On spot premiums, market quotes against TD are expected to run around parity. This week, SMM silver ingot spot premiums in Hong Kong (against LBMA) showed a relatively large discount, mainly due to the import window opening. Among these, processing trade export premiums were at a discount of 0.15-0.1 $/oz, Ordinary Trade import premiums were near a discount of 0.05 $/oz, and the overall quotation range was a discount of 0.15 to 0.05 $/oz.
[Silver Weekly Data Commentary]
As of September 9, silver ETF holdings stood at 15,226.98 mt, down 0.35% MoM. The LBMA gold/silver ratio recorded 67, with mixed bullish and bearish signals emerging recently, leaving precious metals falling under pressure.
![[SMM Macro Analysis]Fed Raises Rates, Signals "Higher for Longer," Pressuring Precious Metals Amid Sticky Inflation](https://imgqn.smm.cn/usercenter/wDeWQ20251217171734.jpeg)
