Silver Price Consolidates and Rebounds, Spot Premiums Hold Steady [SMM Daily Commentary]

Today's SMM 10:00 AM price for the Ag (T+D) contract on the Shanghai Gold Exchange is 14,558 yuan/kg, with the premium quoted in the range of TD+5 to +15 yuan/kg and averaging +10 yuan/kg.

On the macro front, Fed Chairman Warsh made dovish remarks, stating that inflation expectations and risks have both declined in recent weeks and reiterated that the Fed would not provide forward guidance. Combined with yesterday's ADP employment data, which came in below expectations, market expectations for rate hikes cooled somewhat, though no clear directional shift has emerged, and the US dollar remained strong. Precious metals consolidated in the short term, with the market focus shifting to tonight's US non-farm payrolls data for further signals.

In the spot market, overall offers remained firm at the start of the month, but follow-through buying was somewhat weak, with consumption falling short of expectations. As silver prices rebounded slightly, downstream wait-and-see sentiment intensified. Early-morning offers in the Shanghai region were mainly in the range of TD+5 to +15 yuan/kg. Some smelters quoted higher, but actual buying sentiment was sluggish, with transactions concentrated around TD+10 yuan/kg. Low-priced cargoes in other regions were largely cleared, and offers in Shenzhen were mostly centered in the TD+5-10 yuan/kg range. Today, the premium against the most-traded SHFE 2608 contract was quoted at a discount of 20-30 yuan/kg.

Overall, the modest cooling of rate hike expectations provided some support for precious metals prices. The spot direction at the start of the month remains unclear. Last month's copper smelter maintenance caused minor disruptions to the supply side, and overall offers maintained a slight premium structure.