COMEX Silver and SHFE Silver Surge; Silver Prices Break Above 8,200 Yuan, Deterring Downstream Buyers [SMM Newsflash]

SMM February 14 News:

The US tariff policy continued to disrupt the market, fueling risk aversion and weakening the US dollar, which ignited the enthusiasm of bulls for precious metals. Precious metals futures rose further on February 14. Notably, in the afternoon of February 14, SHFE silver and COMEX silver saw a sharp surge. As of 16:33 on the 14th, COMEX gold rose 0.52% to $2,960.7/oz; COMEX silver rose 3.76% to $33.955/oz, with an intraday high of $34.025/oz, marking a new high in over three months. SHFE gold rose 0.99% to 688.4 yuan/g; SHFE silver rose 3.33% to 8,254 yuan/kg, hitting a new high in over three months at 8,263 yuan/kg intraday.

(Shanghai Futures Exchange Designated Delivery Warehouse Futures Warehouse Warrant Daily Report)

News

Data released by the US Department of Labor showed that the US January PPI YoY rose 3.5%, the largest increase since February 2023, compared to an expected rise of 3.2% and a previous rise of 3.30%. The US January PPI MoM rose 0.4%, compared to an expected rise of 0.30% and a previous rise of 0.20%. The US January core PPI YoY rose 3.4%, while the core PPI MoM rose 0.3%. Initial jobless claims for the week ending February 8 were 213,000, compared to an expected 215,000 and a revised previous figure of 220,000 from 219,000. Thursday's US producer price data suggested that the core Personal Consumption Expenditures (PCE) data—favored by the US Fed—set to be released later this month, might come in lower than previously expected for January. Despite producer prices rising more than economists anticipated, futures traders are pricing in about 33 basis points of rate cuts by the end of December, up from 29 basis points before Thursday's data release but down from 37 basis points before Wednesday's CPI data release. The Personal Consumption Expenditures Price Index is scheduled for release on February 28. Following Thursday's data release, Morgan Stanley economists revised their forecast for January's core PCE increase from 0.4% to 0.3%.
　　
[White House Statement on "Reciprocal Tariff" Policy: Trump to Launch a "Fair Reciprocity Plan"] The White House issued a statement regarding President Trump's announcement on the 13th of the "reciprocal tariff" policy, stating that Trump will launch a "Fair Reciprocity Plan" to reduce the US's persistent large trade deficit and address "unfair and unbalanced trade issues" with foreign trading partners. Under this plan, the Trump administration will review all non-reciprocal trade relationships with US trading partners and determine tariff reciprocity between the US and each trading partner. (CCTV News)

[World Gold Council: Global Gold ETFs Saw a Net Inflow of $3 Billion in January 2025] Data from the World Gold Council showed that global physical gold ETFs achieved a net inflow of $3 billion in the first month of 2025. Europe led the inflows, adding $3.4 billion, the largest monthly inflow since March 2022, while North America saw outflows for the second consecutive month, with $499 million withdrawn. By the end of January, the total assets under management of global gold ETFs rose to $294 billion, setting a new record, with holdings increasing by 34 mt. In January, the global average daily trading volume of gold reached $264 billion, up 20% MoM. This growth was mainly attributed to a 60% MoM surge in COMEX trading volume, driven by strong gold prices attracting traders, which in turn boosted global exchange trading volumes by 39%.

[Bank of England Gold Vault Discounts Due to Delivery Delays] Reports indicate that gold in the Bank of England's vault is trading at levels below the prevailing market price. The reason is market concerns over potential tariff hikes by Trump, sparking a gold-buying frenzy that has led to weeks-long queues for withdrawing gold from the bank. According to insiders, traders are quoting prices for the Bank of England's gold at over $5/oz below the London spot gold price. Such a price spread is highly unusual. Typically, the Bank of England's gold trades in line with other markets in London. Elsewhere in London, gold vaults operated by institutions like JPMorgan and HSBC are just minutes away, with frequent trading activity. Traders noted that in the past, central bank trading activities would influence premiums or discounts by no more than a few dozen cents per ounce. This price dislocation has occurred because global traders are racing to ship gold to the US ahead of potential tariff hikes to capture premiums. Due to the rush, the Bank of England's staff are struggling to cope with the growing queue for gold withdrawals, making the bank's gold less attractive compared to gold in more accessible commercial vaults in London. (Cailian Press)

Silver Spot Market Shows "Fear of High Prices" Sentiment; Silver Production May Continue to Decline in February

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Price: On February 14, the SMM #1 Silver ex-factory reference average price in the morning was 8,068 yuan/kg, up 80 yuan/kg from the previous trading day, an increase of 1%. According to SMM, as silver prices rose above 8,000 yuan/kg, downstream fear of high prices in the silver spot market gradually emerged, with only a small amount of spot transactions in the morning. As silver futures surged significantly in the afternoon, SHFE silver broke above 8,200 yuan/kg, leaving the spot market quiet.

Production: In January, silver production fell 4.9% MoM but rose 9.3% YoY. Among the 13 companies with reduced production, the main reason was the early shutdown or holiday of companies using recycled silver as raw material due to the upcoming Chinese New Year break in January. Since the cost of restarting furnaces is high, production departments generally operated continuously with rotating staff, while sales and administrative staff followed statutory holidays. Among the 10 companies with increased production, the main reason was continuous furnace operation during the Chinese New Year and holiday periods with on-duty staff, and a longer production cycle in January compared to December. In the second half of January, as downstream companies began to take holidays and traders reduced inventory for the holiday, market purchasing enthusiasm was low. Smelters with less urgent sales tasks postponed the sale of silver ingots produced in the second half of January to after the holiday, while those with more urgent sales tasks began selling last week and this week. Due to weak market demand, selling prices were relatively low. In February, due to the continued impact of the Chinese New Year holiday and a shorter production cycle, production is expected to decline further.

Institutional Comments

Maike Futures stated that while the risk of US external tariffs remains volatile, it is still escalating. The US Fed's recent monetary policy expectations lean towards tightening, mainly due to stable employment data and signs of rising inflation risks. However, precious metal prices are primarily driven by risk aversion sentiment, with the impact of monetary policy tightening being relatively weak.

Guotou Futures Research Report noted that precious metals remained strong today. Last night, US PPI and CPI data both exceeded expectations, and the market expects the US Fed to cut rates once more this year. The US leader signed a reciprocal tariff memorandum, but its implementation will take time. Economic uncertainty continues to support gold prices, which may test the critical $3,000 level in the short term. However, after consecutive gains, the risk of a correction increases, and bulls may consider gradually taking profits and waiting for better risk-reward entry points. Additionally, the Russia-Ukraine parties expressed intentions for peace talks, and progress should be monitored.

ANZ Bank predicts that gold prices will reach a historic high of $3,000/oz by 2025.

Huatai Securities pointed out that although gold may face volatility after strong appreciation driven by multiple short-term factors, the turning point for the appreciation trend is far from over. As the gold squeeze subsides, short-term gold prices may face fluctuations. However, in the medium and long-term, structural factors driving the relative performance of gold assets have not only persisted but have intensified due to growing concerns over US fiscal sustainability and rising trade and economic risks. Therefore, gold is expected to maintain its relative performance for a considerable period.

Goldman Sachs stated that as central banks continue to purchase gold and ETF holdings gradually increase after the US Fed cuts rates, this will continue to support the forecast of gold prices reaching $3,000/oz by Q2 2026. If tariff uncertainties diminish and investment positions normalize, gold prices are expected to have moderate tactical downside room. However, due to the potential for sustained US policy uncertainty, which could heighten risk aversion demand among central banks and investors, the $3,000/oz gold price target carries upside risks.

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