US-Iran Conflict Pushes Up Oil Prices, Strengthened Rate Hike Expectations Suppress Silver Prices [SMM Daily Review]

SMM’s 10:00 a.m. Ag (T+D) price against the Shanghai Gold Exchange was 14,078 yuan/kg, with the premium range quoted at TD-5 to +5 yuan/kg and an average of 0 yuan/kg.

On the macro front, the US-Iran conflict escalated further, with international crude oil futures settlement prices surging over 6%; US initial jobless claims for the week ended July 18 stood at 187,000 (vs. 212,000 expected), far below expectations and reflecting a resilient labour market; the European Central Bank left interest rates unchanged as expected but left the door open for a hike in September. A slew of bearish data weighed on precious metals, which fell under pressure overall.

In the spot market, premiums remained steady with transactions at parity. Some major brand suppliers quoted at a premium, but downstream restocking sentiment for premiums was strong, with deals skewed to the lower end of the range. Month-end invoices had no significant impact for now, while low-price purchases by banking institutions mildly disrupted the market. Morning quotes in Shanghai were mainly concentrated at TD parity to +5 yuan/kg, with suppliers focusing shipments earlier in the week and showing subdued activity today. In Shenzhen, some national standard-grade cargoes were quoted around TD-5 yuan/kg to parity; low-priced sources remained available but did not notably disrupt spot trade. Premiums against the most-traded SHFE 2610 contract were quoted at a discount of 60-50 yuan/kg.

Overall, expectations for further rate hikes picked up again. The chain from rising oil prices to inflation to rate hikes exerted strong transmission pressure, weighing on precious metals. On the spot market side, demand remained soft, and transactions held at parity.