Silver V-Shaped Rebound with 2.9% Weekly Gain, Non-Farm Payrolls Data May Lead to Directional Breakthrough [SMM Silver Weekly Review]

[Silver Price Review and Forecast]

This week (from June 29 to July 2), SMM #1 silver price showed a V-shaped pattern of first falling then rising. At the start of the week, it opened under pressure and weakened, falling to its weekly low on Tuesday. It then gradually rebounded, surging on Thursday driven by improving macro sentiment. For the week, it gained approximately 2.88%, with a weekly price range of 13,900–14,600 yuan/kg. The price trend was highly correlated with macro sentiment.

On the macro front, in the first half of the week, the US Fed’s hawkish stance and a strong US dollar continued to weigh on precious metal valuations, sending silver prices lower for two consecutive days. In the second half, Fed Chairman Warsh made dovish remarks, saying that inflation expectations and risks had both declined in recent weeks. Coupled with ADP employment data coming in below expectations, market expectations for rate hikes cooled, and the US dollar pulled back slightly from high levels, allowing precious metals to catch a breather. Silver prices then rebounded for two straight days.

In the spot market, national silver ingot production fell 6.5% MoM in June, mainly due to maintenance at copper smelters and production halts at some producers, leading to a slight tightening on the supply side. At the beginning of the month, spot offers remained firm. In Shanghai, mainstream premiums were around TD+5 to +15 yuan/kg. However, downstream consumption failed to follow through, with a strong wait-and-see sentiment, resulting in limited actual transactions and a pattern of weak supply and demand both.

Looking ahead, the market focus has shifted to the US non-farm payrolls data this Friday. Silver is expected to maintain a consolidating trend in the short term, awaiting a directional breakout. Price range for next week: SGE futures low is seen at 13,000 yuan/kg and high at 15,500 yuan/kg; LBMA futures low at $50/oz and high at $70/oz.

In terms of spot premiums, the market expects TD quotes to trade in a range from parity to +20 yuan/kg, while SHFE most-traded contract quotes are expected to trade at a discount of 30 to 20 yuan/kg.

[Silver Weekly Data Review]

Regarding weekly inventory, SMM total social inventory stood at 3,326 mt, up 0.48% WoW. Among this, SGE warrants saw a slight inventory buildup, while SHFE continued its previous destocking trend. The shift to inventory buildup this week was mainly due to a slight rebound in silver prices, which turned the downstream consumer market to a wait-and-see stance. Overall, market consumption appeared somewhat sluggish early in the month. Internationally, both LBMA and COMEX inventories continued to accumulate.

As of July 1, silver ETF holdings were 14,922 mt, unchanged from the previous reading, down 0.28% WoW and down 0.44% MoM. The LBMA gold/silver ratio was 69, basically stable this week, edging down slightly.