[Silver Price Review and Forecasts]
This week, SMM #1 silver prices traced an N-shaped trajectory—rising first, then falling, before rebounding. Prices jumped at the start of the week to a weekly high of 14,587 yuan/kg, then pulled back for two consecutive sessions, found safe-haven support on Thursday, and closed the week at 14,286 yuan/kg.
On the macro front, expectations of an Iran-US ceasefire deal buoyed markets in the first half of the week, with oil prices plunging over 5% in a single day and inflation fears easing temporarily; SHFE silver surged 3.06% on July 27. However, no material progress emerged from the ceasefire talks. On July 29, Iran’s Revolutionary Guards announced the interception of three “rogue” oil tankers, rekindling Middle East tensions and driving a sharp oil-price rebound. On Thursday, the US Fed held rates steady in a rare 9:3 vote, with three members dissenting in favor of a hike—interpreted by markets as a “hawkish hold.” The US dollar index tumbled 0.59% to close at 100.81, and coupled with a steep equity sell-off, this lent safe-haven support to precious metals, which bucked the trend.
Spot side, the late-month pattern of weak supply and demand persisted, with trading remaining subdued. After the price surge, consumer buying failed to follow through; premiums in Shanghai held at parity to TD to +10 yuan/kg, with deals skewed toward the low end. As prices pulled back, suppliers began to hold back from selling, with some quotes tilting to a small premium, but downstream buyers preferred to bargain, keeping actual transactions near parity. Smelters showed limited willingness to sell, traders were inactive, and the market increasingly relied on bank transactions to provide a floor. In Shenzhen, standard-grade cargoes traded around TD-5 yuan/kg to parity, with low-priced supplies having limited impact.
Looking ahead, silver is expected to consolidate in a narrow range in the near term, with the broader trend still tilted to the downside. Both the geopolitical conflict and rate-hike expectations have been repeatedly traded and lack sustained driving force. The main downward pressure comes from the risk of stronger-than-expected US economic data in August and the unchanged direction toward tightening. Watch for further market interpretation of the July Fed meeting. Spot-side, attention should be paid to the pace of bank shipments, which could become the key variable steering premium quotes; the supply-demand lull is expected to continue.
For next week’s price range, SGE futures see a low of 13,200 yuan/kg and a high of 15,000 yuan/kg; LBMA futures see a low of $55/oz and a high of $63/oz. Spot premiums are expected to trade around parity or a small premium against TD. This week, SMM’s Hong Kong silver bar spot premium (against LBMA) closed at a discount of $0.35 to $0.2/oz, with Hong Kong demand in the off-season, overall inventory buildup, and limited procurement interest.
[Silver Weekly Data Review]
Weekly inventory: as of July 30, SMM total social inventory stood at 3,658 mt, of which warrant inventory rose by about 214 mt WoW, mainly driven by bank warrant registration and release operations. The warrant inventory change at the Gold Exchange this Friday warrants attention as there may be position rollover activity. Spot inventory moved little overall, showing a slight buildup trend. Internationally, both LBMA and COMEX inventories extended their accumulation trends.
As of July 29, silver ETF holdings were 15,047 mt, down 0.05% WoW but up 0.39% MoM. The LBMA gold/silver ratio stood at 70, and it consolidated this week.
