Silver Prices Consolidate on a Weak Note as Market Turns Cautious Ahead of CPI Data [SMM Daily Commentary]

Today, SMM’s 10:00 a.m. price for the Shanghai Gold Exchange Ag (T+D) is 14,342 yuan/kg, with the premium/discount range quoted at TD parity to +10 yuan/kg, and the weighted average price at 4.76 yuan/kg; against the most-traded SHFE 2612 contract, it is at a discount of 45-30 yuan/kg.

On the macro front, with Williams and Collins making hawkish remarks in succession, if sticky inflation further strengthens expectations for rate hikes within the year, it will add extra pressure on precious metals. At 20:30 tonight, the US will release September CPI data, the most critical macro event this week, and market reaction and message guidance need to be watched.

In the spot market, the basis between TD and the SHFE 2612 contract hovered around 40-50 yuan/kg in early trading, and traders’ overall quoted premiums were basically flat compared with the previous trading day. In the Shanghai area, traders’ morning quotes were concentrated at a discount of 30-35 yuan/kg against SHFE 2612. Despite the decline in futures prices, downstream purchasing sentiment was not significantly boosted, and buyers still preferred to negotiate deals near parity. Refinery ex-works prices also leaned toward parity. End-users showed a “rush to buy amid continuous price rise and hold back amid price downturn” sentiment and temporarily chose to wait and see.

Overall, the macro front is awaiting guidance from CPI data, and hawkish expectations continue to weigh on precious metals. In the spot market, downstream wait-and-see sentiment is strong, and transactions are mainly based on price negotiations. Silver prices may continue to consolidate on a weak note in the short term.