[Silver Price Review and Forecast]
This week, SMM 1# silver prices plunged sharply, with the weekly chart forming a long bearish candlestick. The price center shifted notably lower, with a cumulative weekly decline of nearly 5%.
On the macro front, this week was broadly bearish. On the bearish side, the US PMI far exceeded expectations, and Fed officials frequently struck a hawkish tone, fueling concerns about a resumption of the rate-hike cycle. The US dollar index climbed above 101, and the 10-year Treasury yield briefly breached 5.2%. Trump rejected Iran's ceasefire and the proposal to reopen the Strait of Hormuz, dashing hopes for geopolitical de-escalation and intensifying inflation concerns as oil prices rose. On the bullish side, Williams stated there was "no need to rush" on rate hikes, prompting the market to scale back bets on an October hike. The US release of strategic reserves and the resumption of Saudi pipeline operations pulled oil prices back. Signs of gold prices decoupling from interest rates emerged, and ETF holdings hit a seven-month high, providing bottom support. The market is now awaiting guidance from PCE and non-farm payrolls data.
In the spot market, offers this week were concentrated at parity to a premium of 10 yuan/kg against TD, while Shanghai quotes stood at a discount of 60-50 yuan/kg against the most-traded SHFE 2612 contract. With the National Day holiday approaching, sentiment was subdued, and some traders suspended quoting, widening the quotation spread. Downstream buyers conducted normal inquiries and purchases, mostly negotiating based on orders, with transactions skewed toward the mid-to-low end of the quotation range. Cargoes with invoices dated this month were transacted at the higher end of the range. Overall trading was thin.
Looking ahead, concerns over a resumption of the rate-hike cycle and elevated Treasury yields continue to weigh on silver valuations. However, the Fed's marginally dovish tone, the pullback in oil prices easing inflation pressure, and safe-haven premiums from the geopolitical stalemate providing a floor suggest silver prices may consolidate on a weak note in the near term following the sharp decline, with the trend direction pending validation from PCE and non-farm payrolls data.
For next month's price range, SGE futures are expected to see a low of 14,500 yuan/kg and a high of 16,000 yuan/kg. LBMA futures are expected to see a low of $59/oz and a high of $64/oz. On spot premiums, market quotes against TD are expected to run around a slight premium. This week, the SMM silver ingot Hong Kong spot premium (against LBMA) quotation range was a discount of $0.1 to $0.05/oz. Hong Kong quoting was largely suspended this week, with trading and shipments to resume only after the National Day holiday.
[Silver Weekly Data Commentary]
As of September 29, silver ETF holdings stood at 15,350.54 mt, up 0.76% MoM. The LBMA gold/silver ratio recorded 68. Recent bearish signals have been strong, and silver price fluctuations have shown high elasticity.
On weekly inventory, as of September 30 (Wednesday), SMM total social inventory stood at 3,936 mt, up 39 mt from the previous period. On a warrant basis, SHFE inventory on September 29 was 1,460.36 mt, up 22.7 mt from last Tuesday. SGE inventory on September 24 was 877.62 mt, up 23.82 mt from the previous data. In international markets, LBMA and COMEX inventories continued to build.
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