US Fed hawks hold steady, silver prices rebound but encounter resistance [SMM Daily Review]

Today, SMM's 10 a.m. price for Ag (T+D) on the Gold Exchange stood at 14,291 yuan/kg, with the premium/discount range quoted from parity with TD to +10 yuan/kg and an average of +5 yuan/kg.

On the macro front, the US Fed kept interest rates unchanged at 3.50%-3.75% at its July meeting, but the vote was a rare 9:3 split, with three members favoring a 25bp rate hike, interpreted by the market as a "hawkish hold." After the announcement, the US dollar index plunged below the 101 level in intraday trading, closing down 0.59% at 100.81; meanwhile, retaliatory conflict in the Middle East intensified, and coupled with a sharp drop in US stocks, precious metals found safe-haven support and rebounded against the trend. However, inflation concerns and rate hike expectations have yet to subside, capping the upside room.

In the spot market, the pattern of weak supply and demand persisted at month-end. Smelters showed low willingness to sell, the spot-futures price spread widened today, traders were not active in either buying or selling, downstream consumption was sluggish, and the market relied more on transactions with banks as a backstop, with quotes and deals leaning toward slight premiums. In Shanghai, morning quotes were mainly concentrated from parity with TD to +10 yuan/kg, transactions were moderate, and SHFE warrant inventories continued to build up. In Shenzhen, some standard-grade cargoes were quoted around parity; low-priced cargoes existed but did not significantly disrupt spot trading. Today, the market's premium/discount quote against the most-traded SHFE contract 2610 was a discount of 60-50 yuan/kg.

Overall, while the Fed held rates steady, the hawkish voting structure suggests that rate hike bets remain, giving precious metals a short-term rebound but still capping them in the medium and long term. In the spot market, the weak supply-demand pattern persisted, with sluggish trading.