Weaker ADP Data Boosted Silver Prices; Spot Demand Weak, Trading Sluggish [SMM Daily Commentary]

Today, SMM's 10:00 am price for Ag (T+D) on the Shanghai Gold Exchange was 15,175 yuan/kg, with the premium range quoted at TD-5 to +10 yuan/kg and an average of +2.5 yuan/kg.

On the macro front, US July ADP employment recorded an increase of only 44,000, lower than the expected 70,000 and the previous 95,000, marking the smallest gain since January this year. The weakening employment reinforced expectations for a US Fed interest rate cut, which was bullish for precious metals. In the Middle East, US-Iran negotiations are still progressing, and expectations for the reopening of the Strait of Hormuz have fluctuated. Attention will be on this week's non-farm payrolls data for further guidance. In the spot market, trading continued to weaken today, with the stronger silver price further suppressing downstream purchase willingness. Although low-price offers disrupted the market, smelter transactions were underpinned by banking institutions. The spot-futures price spread widened slightly in the morning, traders' offers remained relatively high, and transactions were concentrated near parity. In Shanghai, morning offers were mainly concentrated from TD parity to +10 yuan/kg. In Shenzhen, some standard-grade cargoes were concentrated around a small discount to parity; demand was sluggish, with only just-in-time procurement. Today, the market's premium/discount against the most-traded SHFE 2610 contract was quoted at a discount of 65–50 yuan/kg.

Overall, the weak US economic data stimulated a rebound in precious metals. In the short term, direction will depend on the signal from the non-farm payrolls data. In the spot market, the rise in silver prices further suppressed demand, orders remained sluggish, and the transaction center shifted downward.