Bullish Factors Digested, Silver Prices Pulled Back; Spot Silver Held at Parity [SMM Daily Review]

Today SMM's 10:00 price for SGE Ag(T+D) was 15,540 yuan/kg, with premium/discount quotes ranging from TD-5 to +5 yuan/kg and averaging 0 yuan/kg.

On the macro front, today's bullish factors: the Bank of Korea bought gold assets for the first time in 13 years and may continue to increase holdings; US July PPI unexpectedly came in below expectations, and inflationary pressures further eased. On the bearish side, the US Fed's Hammack reiterated that rates must be raised now, and Barkin said rate hikes may be needed to achieve the inflation target. Spot silver settled down 1.34% yesterday at $64.47/oz. Earlier bullish factors had been largely digested; short-term upward momentum was insufficient, bulls took profits, and precious metals maintained a wild-swing pattern.

In the spot market, the spot-futures price spread continued to narrow; suppliers were relatively active in offering, and quotes leaned toward parity. Yesterday's decline in silver prices spurred some consumers to enter the market, but overall market demand remained sluggish, with only a small number of rigid-demand transactions for acceptance needs; downstream users mostly stayed on the sidelines today. In Shanghai, morning quotes were mainly concentrated between TD parity and +5 yuan/kg; weekend trading momentum was insufficient, warrant inventories continued to accumulate, and a small number of deals leaned toward parity. In Shenzhen, some national-standard supply was concentrated around a slight discount to parity. Today, market premium/discount quotes for the most-traded SHFE 2610 contract were at a discount of 55 to 45 yuan/kg.

Overall, silver prices mildly retraced part of their gains; short-term bullish factors were not enough to push futures further higher, and prices are expected to maintain a fluctuating trend. In the spot market, lower silver prices combined with demand gradually returning after the summer break are expected to help promote trading, but the overall market remains in a sluggish state.