Last Week's "Dovish" Statements Caused Silver Price Fluctuations [SMM Analysis]

Last week, silver prices showed a trend of rising first and then falling. The ex-factory reference price range for SMM 1# silver in the morning of August 23 was 7,350-7,500 yuan/kg. Several US Fed officials suggested rate cuts last week, leading to speculation about whether the rate cut in September would be 25 basis points or 50 basis points, causing price fluctuations.

[Macroeconomic Data]: Bullish: The EIA crude oil inventory for the week ending August 16 was -4.649 million barrels, lower than the previous 1.357 million barrels and the expected -2.672 million barrels; the initial jobless claims for the week ending August 17 were 232,000, higher than the previous 228,000 and the expected 230,000.

[Spot Market] Silver: Last week, the spot premiums for spot silver ingots meeting national standards in Shanghai were around 3 yuan/kg with cash, and the spot premiums for spot silver ingots from large factories were around 4-5 yuan/kg with cash. Due to the large basis difference, the spot premiums/discounts in the spot market remained at a high level last week. As prices rose, buyers were less willing to accept high premiums, and sellers, under little sales pressure, were unwilling to lower prices, resulting in relatively stagnant prices. Additionally, the price of silver last week was higher compared to previous periods, leading to relatively low purchasing enthusiasm in the market.

Downstream: Due to rising prices and the market replenishment in the previous two weeks, market purchasing demand was not strong last week. Although market purchasing demand appeared when waiting for price reductions, the rising prices quickly suppressed market purchasing and stocking demand.