Silver Prices Consolidate at Lows After Holiday as Weak Nonfarm Payrolls Combine with Geopolitical and Energy Shifts [SMM Daily Review]

Today, SMM's 10:00 price for SGE Ag (T+D) was 14,646 yuan/kg, with the premium/discount range quoted at TD-5 to +10 yuan/kg and a weighted average price of 1.35 yuan/kg.

On the macro front, three main themes intertwined to influence the market during the National Day holiday. First, US September non-farm payrolls data unexpectedly disappointed, with only 29,000 new jobs added, and the probability of an October rate hike plunged from about 26% to about 20%, as the market quickly shifted to the narrative of "no more hikes this year." Second, Middle East geopolitical conflicts continued to escalate—the US sent a third aircraft carrier to the region, Iran's parliament speaker stated that the Strait of Hormuz would not reopen until conditions were met, Houthi forces attacked Saudi Aramco, and Iran's Revolutionary Guard threatened a "more lethal response." Third, the energy supply landscape was reshaped—the G7 released 100 million barrels of strategic reserves, Trump denied a diesel export ban, Saudi Arabia resumed exports after repairing its east-west pipeline, and OPEC+ postponed its capacity assessment. On US Treasuries, the 10-year yield shot up to 5.36% during the holiday, a more than 20-year high, before pulling back to around 5.28%. After the holiday, the market will focus on US September CPI data and US Fed officials' speeches to gauge marginal changes in December rate hike expectations.

In the spot market, silver prices continued to consolidate at lows after the holiday, with active inquiries but overall cautious trader offers. Morning quotes in Shanghai were at discounts of 50-40 yuan/kg against the most-traded SHFE 2612 contract, with downstream buyers mostly negotiating and comparing prices, and actual transactions leaning toward parity with TD, with trading activity significantly improved from month-end. Overall quotes today were at discounts of 55-40 yuan/kg against SHFE 2612.

Overall, silver prices showed a consolidation pattern of rising first then falling, with a cumulative decline of about 1.1% during the holiday. On October 8, as China's market reopened after the holiday, attention may turn to the dense speeches by US Fed officials, developments in the Middle East, and progress on the G7 reserve release. Today's transactions were concentrated near parity for SGE Ag (T+D).