Silver Prices Retreat from Highs, Sellers Hold Back Spot Premiums Continue to Soar [SMM Daily Review]

Influenced by the significant overnight fluctuations in the gold market, precious metals prices experienced a high-level correction today. The backwardation structure of the SHFE silver 2602-2604 contract price spread between futures contracts narrowed slightly, but domestic spot market supply remained tight, with spot premiums still showing an upward trend compared to yesterday. Approaching month-end, quoted offers for circulating spot cargoes in the market were scarce. Although silver ingot suppliers in the Shanghai area raised their TD premiums to 1,500-2,000 yuan/kg during the morning session, market transactions were limited, with downstream users making only small just-in-time procurement purchases. Due to factors such as declining supplier inventory and difficulties in picking up goods from the gold exchange, multiple traders held prices firm and were reluctant to sell as their inventories decreased. A small amount of spot silver material in the market was quoted at extreme levels, such as +1,800 yuan/kg against the 2604 contract or a TD premium of 3,000 yuan/kg. Sellers in the silver spot market were reluctant to sell. Although futures prices for precious metals declined, the actual spot price did not show a clear downward trend when considering spot market premiums. As a result, factories showed little enthusiasm for purchasing on dips. Silver powder and silver nitrate enterprises generally adopted a wait-and-see stance due to the sharp rise in premiums, while some end-users suspended order-taking to avoid risks. Downstream users were cautious about high prices and purchased cautiously, leading to thin market trading. The silver spot market approached a situation where there were quotes but no actual transactions.