Silver consolidates at lows ahead of US Fed rate meeting; spot trades show weak recovery [SMM Silver Weekly Review]

[Silver Price Review and Forecast]

This week, SMM 1# silver prices moved sideways at low levels within a narrow range. Prices rebounded slightly to yuan 13,878/kg early in the week before pulling back, hit a stage high of yuan 13,949/kg mid-week, then declined again, with the full week spent seesawing within the yuan 13,700-14,000/kg range.

On the macro front, this week saw mixed signals with no clear direction. On the bullish side, Fed Chairman Warsh said at the IMF annual meeting that he would not prejudge the October FOMC outcome, and the probability priced in for an October rate hike fell below 15%; Trump signed an executive order waiving multiple sanctions against Russia, with Russia-Ukraine tensions easing marginally; the US dollar index pulled back at one point and the 10-year Treasury yield declined, with financial conditions easing marginally; the World Gold Council expects the digital gold market to grow roughly threefold over the next five years, reinforcing the long-term demand narrative. On the bearish side, Treasury yields overall stayed high, and the US dollar index rose to 101.97 at one point; Middle East geopolitical risks continued to simmer, with Iran's Revolutionary Guard hinting that a blockade could extend to the Suez Canal, Saudi Arabia's eastern oilfield hit by a drone attack, and the US State Department ordering the evacuation of some embassy personnel from Saudi Arabia. The market consolidated ahead of next week's Fed FOMC meeting.

In the spot market, offers this week were concentrated at a discount of yuan 25-30/kg against the SHFE 2612 contract, with some smelters offering Ex-works at a discount of yuan 40-45/kg against the 2612 contract, and actual deals concentrated near parity against TD. Spot market activity was relatively good overall this week. Silver prices fluctuated within a narrow range, and suppliers generally held back from selling while holding prices firm. However, as silver prices dipped, end-user restocking demand and bill-related demand continued to be released, with dip-buying relatively active. Although buyers and sellers bargained intensely and earlier stockpiling had already absorbed some demand, overall trading sentiment improved from the prior period, showing a weak recovery trend.

Looking ahead, next week's Fed FOMC meeting is the key variable. With Warsh not prejudging the outcome and the probability of an October rate hike priced back to low levels, if the meeting signals a pause, silver prices could see a window for sentiment repair. However, high Treasury yields and recurring Middle East geopolitical tensions remain headwinds, and silver lacks the central bank gold-buying-style floor, so prices are likely to continue moving sideways in the near term while awaiting the FOMC outcome.

For next month's price range, SGE futures are seen at yuan 13,000/kg on the low end and yuan 145,000/kg on the high end; LBMA futures are seen at $55/oz on the low end and $58/oz on the high end. On spot premiums, TD quotes are expected to run around parity.

This week, SMM silver ingot Hong Kong spot premium (against LBMA) was quoted at a discount range of $0.15-0.1/oz, with little overall change. According to China Customs data, China's exports of 99.99% unwrought silver in September 2026 were 309.77 mt, down 23.7% MoM; cumulative exports in January-September were 3,341.28 mt, down 8.2% YoY. On the import side, imports of 99.99% unwrought silver in September were 114.93 mt, up 73.5% MoM; cumulative silver ingot imports in 2026 reached 1,066.32 mt.

[Silver Weekly Data Commentary]

As of October 21, silver ETF holdings stood at 15,485.69 mt, up 1.03% MoM. The LBMA gold/silver ratio was 72, with silver prices fluctuating more than gold.

On inventories, SMM social inventory this week was 3,833.92 mt, destocking by 75 mt WoW. Specifically, SGE warrant inventory this period was 884.78 mt, up 19 mt from the prior period; SHFE warrant inventory this week was 1,378.15 mt, destocking by 82.81 mt from last Wednesday.

Overall inventory destocking this week was mainly driven by lower silver prices stimulating downstream dip-buying. Market feedback indicated relatively active deals on the 15th, 16th, 20th, and 22nd. In addition, seasonal jewelry demand in Shenzhen continued to be released, combined with some bill discounting and acceptance demand, jointly pushing inventories lower.