Expectations for US Fed interest rate cut heat up; silver prices stop falling and rebound, consolidating at a high level [SMM Weekly Review]

Macro side, US Treasury Secretary Besant stated in an interview on Wednesday (August 13) that the US Fed interest rates should be 150-175 basis points lower than current levels, and if the data had been accurate, the Fed could have cut interest rates earlier. Mid-week US CPI data release coupled with personnel changes at the US Fed intensified expectations for US Fed interest rate cuts, weakening the US dollar and causing a plunge in the 10-year US Treasury yield, boosting silver to stop falling and rebound. The latest IEA report on Thursday projected a record global oil supply surplus in 2026, with inventories accumulating at a rate of 2.96 million barrels per day, surpassing the peak during the 2020 pandemic period. Weak crude oil prices briefly weighed on the precious metals market. This week, traders have fully priced in expectations for a US Fed rate cut at next month's meeting, with a fierce tug-of-war between longs and shorts in the precious metals market keeping prices consolidating near yearly highs in the short term.

[Economic Data]

Bullish:
US July unadjusted CPI YoY actual: 2.7%, expected: 2.80%, previous: 2.70%.

Bearish:
US API crude oil inventories for the week ending August 8 actual: 1.519 million barrels, expected: -941,000 barrels, previous: -4.233 million barrels
US EIA crude oil inventories for the week ending August 8 actual: 3.036 million barrels, expected: -27.5, previous: -302.9

[Spot Market] In the silver spot market, prices saw a slight correction early in the week, with downstream buyers actively stockpiling at lower levels. After mid-week price strength resumed, spot transactions gradually weakened. The spot-futures price spread between the most-traded SHFE silver 2510 contract and SGE TD remained at 30-33 yuan/kg this week, with many suppliers still holding back sales and adopting a wait-and-see approach. Standard silver ingot spot prices in Shanghai quoted at a premium of 3-5 yuan/kg against TD saw almost no transactions at higher premiums, while some traders traded at discounts of 24-26 yuan/kg against the SHFE silver 2510 contract. Large producers' silver ingot suppliers quoted premiums of 5-7 yuan/kg against TD or discounts of 22-23 yuan/kg against the SHFE silver 2510 contract. Additionally, some smelters suspended quotations due to August production cuts or export plans affecting domestic supply. This week saw tepid supply and demand in the spot market, with downstream buyers generally cautious after completing early-week stockpiling, leading to declining purchase enthusiasm and weaker spot market transactions.

PV: This week's average reference prices for solar cell rear-side silver paste ranged 5,930-6,036 yuan/kg; solar cell front-side finger averaged 8,930-9,088 yuan/kg; solar cell front-side busbar averaged 8,880-9,038 yuan/kg.