SHFE silver rises over 3%, platinum gains more than 2%; precious metals sector rises for two consecutive days; strong wait-and-see sentiment in silver and platinum spot markets [SMM Flash]

SMM, August 28:

On August 28, precious metals futures and related stocks generally rose. As of around 16:05 on August 28, COMEX gold edged up 0.01% to $4,664.6/oz; the most-traded SHFE gold contract rose 0.08% to 999.28 yuan/g; COMEX silver gained 1.79% to $71.495/oz; the most-traded SHFE silver contract climbed 3.15% to 17,215 yuan/kg; silver T+D advanced 2.78% to 17,180 yuan/kg. In addition, the most-traded platinum futures contract rose 2.19% to 462.95 yuan/g, and the most-traded palladium contract gained 4.37% to 329.75 yuan/g. In equities, as of the close on the 28th, the precious metals sector extended the previous session's gains, rising 1.33%. Among individual stocks, Hunan Gold jumped 7.03%, with Xingye Silver&Tin, Sichuan Gold, and Chifeng Gold among the top gainers. In early trading, precious metals were broadly in the doldrums amid risk-averse caution. In the afternoon, renewed trading on US Treasury fiscal risks and a softer US dollar prompted some market funds to re-enter and lift futures. The rise in futures boosted miners' earnings expectations, driving the sector higher in tandem. The market awaited policy signals from the Jackson Hole conference.

Spot Market

Silver

In the spot market, on August 28, the average ex-factory reference price for SMM 1# silver in the morning was 16,656 yuan/kg, down 1.39% from the previous trading day. Quotes today were concentrated at a discount of 10 yuan/kg against silver T+D to parity. At month-end, suppliers showed weak willingness to sell, and some enterprises that had cleared inventory suspended quoting. The spot-futures price spread narrowed slightly, and actual transactions remained at a small discount. Some buyers needing to supplement input tax quotas due to invoice issues showed certain inquiries. Morning quotes in Shanghai were mainly near parity, while transactions in Shenzhen were generally at a small discount, with relatively sluggish demand. Today's premium/discount quotes against the most-traded SHFE 2610 contract were at a discount of 55 to 45 yuan/kg.
Overall, precious metals maintained a fluctuating game in the short term, with heavy wait-and-see sentiment in the market as participants awaited further clarity from Jackson Hole. In the spot market, selling sentiment was weak at month-end, low-priced supply was limited, and mainstream transactions remained at discounts.

Platinum

In the spot market, on August 28, the average spot price of platinum was 449 yuan/g, down 0.55% from the previous trading day. Mainstream platinum quotations were at a discount of 3.5-2.5 yuan/g against the PT2610 contract. Suppliers' quoted discounts were basically flat compared with the previous trading day. Some suppliers chose to sell at slight concessions due to pressure from warrant cancellations at factory warehouses, and some enterprises made small purchases due to demand for invoices dated this month. Downstream enterprises remained mostly on the sidelines, with weak consumption. Overall, platinum spot market transactions remained sluggish today.

Market Views

Regarding the outlook for precious metals, views from multiple institutions are as follows:

Christopher Wong of OCBC said the Jackson Hole conference will be the next key test for gold. Market attention is focused on Fed Chairman Warsh's speech, but since such speeches typically do not include a Q&A session, there is limited room for the market to demand clearer signals on September policy. However, traders may still scrutinize the speech for clues about the Fed's overall policy framework and how Warsh defines it, which may involve inflation persistence and forward guidance. "These factors could still affect the US dollar, interest rates, market sentiment, and precious metals." OCBC remains bullish on gold, as concerns about US fiscal credibility support demand, but gold's failure to hold recent highs, coupled with the rebound in yields and the US dollar after stronger inflation data, suggests that chasing the rally is not advisable in the short term. (Jin10 Data APP)

Terry Heymann, Chief Strategy Officer at the World Gold Council, said that even in an environment of higher gold prices, mining companies hoping to increase production would find it difficult to achieve rapid expansion in a short time, because there are not enough high-quality resources in the market that can be quickly developed and utilized. The World Gold Council expects global gold mine supply to grow only mildly by about 1% over the next 12 months. International gold prices, after retreating from a rapid rise earlier this year, have recently rebounded quickly again, briefly touching the $4,700/oz mark and hitting a near three-month high.

Minmetals Futures believes that after the release of US July PCE data, market pricing for subsequent Fed interest rate hikes has risen somewhat. In addition, the tariff game between the US and Canada may bring new upward pressure on inflation going forward. Against this backdrop, Warsh's speech at the Jackson Hole global central bank annual meeting may cause short-term disturbances to precious metals prices.

Kelvin Wong, senior market analyst at OANDA, said the narrative of US dollar depreciation, coupled with concerns about the US budget deficit, continues to support gold in the medium term. The US Treasury previously announced an expansion of purchases of older long-term bonds, triggering concerns about dollar depreciation, and gold prices rose more than 5% last week as a result. Wong added: "The market is waiting for Warsh's speech to get a clearer picture of how the Fed will respond to the current economic situation. If he does not provide specific forward-looking monetary policy guidance, then the market's current pricing for rate hikes is likely to remain largely unchanged." (Jin10 Data APP)

On Tuesday (August 25), Goldman Sachs reiterated its gold price forecast, expecting gold to reach $4,900/oz by the end of 2026. This forecast is mainly driven by increased demand for call options, which could amplify gold price fluctuations near key strike prices. (Zhitong Finance)

Citigroup raised its three-month gold target price to $4,800/oz, after the US Treasury announced an expansion of long-term bond buybacks, pushing gold priceshigher. Analysts including Hu Kenni wrote in a research note that the upward momentum in gold prices"still has room for further release." Analysts said: "So far, this rally has been driven mainly by speculative funds, especially futures inflows. For the rally to be sustained, physical demand needs to catch up." Citi maintained its 6-12 month gold target price of $5,000/oz, citing the eventual resolution of the Strait of Hormuz situation, lower real interest rates, and a dovish shift in the Fed's stance.

Fangzheng Securities said in a research note that the US Treasury's increased long-term bond buybacks weakened the upward momentum of long-end yields, and weak US economic data suppressed expectations for Fed rate hikes and the US dollar's strengthening momentum. Gold pricessubsequently broke through $4,600/oz, and the precious metals equity market showed considerable resilience. The market awaits further loosening of year-end rate hike expectations and the stronger dollar narrative, which would bring structural opportunities to the precious metals equity market. Looking ahead, AI-driven inflation and the US fiscal side are expected to continue creating a favorable environment for gold. The firm remains optimistic about subsequent market liquidity and recommends continued attention to the high allocation value of the precious metals sector.

Strategists at ING said in a report that gold prices have rebounded sharply from July lows, supported by recovering investment demand and growing unease over the US fiscal outlook, rising from about $4,000 per troy ounce in mid-July to about $4,600, returning to levels seen since May. Strategists said the prospect that the US Treasury may expand bond buybacks has refocused market attention on US government borrowing and fiscal credibility. They added: "This has also reignited concerns about currency depreciation, further enhancing gold's appeal as a store of value." (Jin10 Data APP)

The latest view from UBS Wealth Management's Chief Investment Office said that as investors reassess US monetary policy and the dollar outlook, gold prices have broken out of their recent consolidation pattern and moved higher again, with demand-side factors also providing support. Three conditions will help gold extend its gains: continued dollar weakness, lower market expectations for US real interest rates, and further strengthening of gold investment demand. UBS maintained its year-end gold price target of $4,600/oz and introduced a new target of $5,400/oz for the end of September 2027, $200 higher than its target for the end of June 2027. "We believe slowing inflation will become the main market focus next year. With favorable base effects and other factors, inflationary pressures are expected to ease, which will benefit assets such as gold that were previously constrained by rate hike expectations." UBS also expects US economic activity to be at or below trend levels, which could put the dollar under pressure and further support gold demand.

Morgan Stanley analyst Amy Gower said in a report last Thursday that gold prices have already reached its Q4 target ahead of schedule and could climb above $5,000 in 2027, although the process may be volatile. The investment bank said improving macroeconomic conditions are boosting demand for gold ETFs, as expectations for Fed rate hikes gradually fade and the dollar weakens, while strong central bank purchases and stronger physical demand are also supporting gold prices. Despite persistently high long-term yields, gold has remained resilient. Morgan Stanley said this suggests investors are increasingly concerned about fiscal risks, including high government debt and potential currency depreciation.

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