SMM, August 28:
On August 28, precious metals futures and related stocks generally rose. As of around 16:05 on August 28, COMEX gold rose 0.01% to $4,664.6/oz; SHFE gold main contract rose 0.08% to 999.28 yuan/g; COMEX silver rose 1.79% to $71.495/oz; SHFE silver main contract rose 3.15% to 17,215 yuan/kg; silver T+D rose 2.78% to 17,180 yuan/kg. In addition, platinum main contract futures rose 2.19% to 462.95 yuan/g, and palladium main contract rose 4.37% to 329.75 yuan/g. In the stock market, as of the close on the 28th, the precious metals sector extended the previous trading day's gains with a further 1.33% rise. Among individual stocks, Hunan Gold rose 7.03%, and Xingye Silver & Tin, Sichuan Gold, and Chifeng Gold led gains. In the morning session, the market was cautious due to risk aversion, and precious metals generally ran weak; in the afternoon, trading on US Treasury fiscal risks resumed and the dollar trended weaker, with some market funds re-entering to lift futures. The rise in futures raised miners' earnings expectations and drove the sector higher. The market awaited policy signals from the Jackson Hole conference.
Spot Market
Silver
In the spot market, on August 28, the morning ex-factory reference average price for SMM #1 silver was 16,656 yuan/kg, down 1.39% from the previous trading day. Offers today were concentrated from a discount of 10 yuan/kg against TD to parity. At month-end, suppliers showed weak willingness to sell, and some enterprises that had cleared inventory suspended offers. The spot-futures price spread narrowed slightly, with actual transactions still at small discounts. Some buyers that needed to supplement input VAT credits due to invoice issues made certain inquiries. Morning quotes in Shanghai were mainly around parity, while transactions in Shenzhen were generally at small discounts, and demand was relatively sluggish. 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 tug-of-war in the short term, with heavy market wait-and-see sentiment, awaiting further direction from Jackson Hole. In the spot market, selling sentiment at month-end was weak, low-priced cargoes were limited, and mainstream transactions remained at discounts.
Platinum
In the spot market, on August 28, the average spot platinum price was 449 yuan/g, down 0.55% from the previous trading day. Mainstream platinum quotes were at a discount of 3.5-2.5 yuan/g against the PT2610 contract. Suppliers' quoted premiums/discounts were basically flat from the previous trading day. Some suppliers chose to sell at small concessions due to pressure from warrant cancellations at factory warehouses, and some enterprises made small purchases due to demand for cargoes with invoices dated this month. Downstream enterprises remained mainly wait-and-see, with weak consumption. Overall, spot platinum market transactions remained sluggish.
Voices from the Market
Regarding the outlook for precious metals, views from several institutions are as follows:
Christopher Wong of OCBC said the Jackson Hole conference would be the next key test for gold. Market attention was focused on Fed Chairman Warsh's speech, but since such speeches usually do not include a Q&A session, there was limited room for the market to obtain 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 that framework, possibly involving inflation persistence and forward guidance. "These factors could still affect the dollar, interest rates, market sentiment and precious metals." OCBC remained bullish on gold, as concerns over US fiscal credibility supported demand, but gold's failure to hold recent highs, combined with the rebound in yields and the dollar after stronger inflation data, meant it was not advisable to rush to buy amid continuous price rises in the short term. (Jin10 Data APP)
World Gold Council Chief Strategy Officer He Tairui said that even in an environment of high gold prices, mining enterprises that want to increase output would find it difficult to expand rapidly in a short period because there are not enough high-quality resources in the market that can be quickly developed and utilized. The World Gold Council expects only about 1% mild growth in global gold mine supply over the next 12 months. International gold prices, after a retreat following a rapid rise at the start of this year, recently rebounded rapidly again, briefly touching the $4,700/oz level and hitting a new high in nearly three months.
Minmetals Futures said that after the US July PCE data came out, market pricing for further US Fed interest rate hikes increased somewhat. In addition, the tariff game between the US and Canada may create new upward pressure on inflation. Against this backdrop, Warsh's speech at the Jackson Hole global central bank annual meeting may bring short-term disturbance to precious metals prices.
OANDA senior market analyst Kelvin Wong said the narrative of a weaker dollar, together with concerns over the US budget deficit, continued to support gold over the medium term. The US Treasury announced earlier that it had expanded purchases of older long-term bonds, triggering concerns about dollar depreciation; 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 understanding of how the Fed will respond to the current economic situation. If he does not provide specific forward-looking monetary policy guidance, 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 prices to reach $4,900/oz by the end of 2026. This forecast was mainly driven by increased demand for call options, which could amplify gold price fluctuations near key strike prices. (Zhitong Finance)
Citi raised its three-month gold price target to $4,800/oz after the US Treasury announced an increase in long-term bond buybacks, driving gold prices higher. Analysts including Hu Kenni wrote in a research note that gold price upward momentum "still has further room to be released." The analysts said, "So far, this rally has been mainly driven by speculative funds, especially futures fund inflows. If the rally is to be sustained, physical demand needs to catch up." Citi kept its 6-12 month gold price target at $5,000/oz unchanged, citing the eventual resolution of the Strait of Hormuz situation, lower real interest rates, and a dovish Fed stance.
Founder Securities said in a research note that the US Treasury stepped up long-term bond buybacks, weakening the upward momentum of long-end yields; combined with soft US economic data that dampened expectations for US Fed interest rate hikes and the dollar's strengthening momentum, gold prices broke above $4,600/oz, and the precious metals equity market showed notable resilience. The brokerage awaits further loosening in the logic of rate hike expectations and dollar strength within the year, which may bring structural opportunities to the precious metals equity market. Looking ahead, AI inflation and the US fiscal side are likely to continue creating a favorable environment for gold. It remains optimistic about subsequent market liquidity and recommends sustained attention to the high allocation value of the precious metals sector.
ING strategists said in a report that, supported by recovering investment demand and growing market unease over the US fiscal outlook, gold prices had rebounded sharply from July lows, rising from about $4,000 per troy ounce in mid-July to about $4,600, returning to levels seen since May. The strategists said the prospect of the US Treasury expanding Treasury bond buybacks had 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)
UBS Wealth Management Chief Investment Office said in its latest view that, as investors reassessed US monetary policy and the dollar outlook, gold prices broke out of their recent consolidation pattern and moved higher again, with demand-side factors also adding support. Three conditions will help gold extend gains: continued dollar weakness, lower market expectations for US real interest rates, and further strengthening of investment demand for gold. UBS maintained its year-end gold price target at $4,600/oz and introduced a new target of $5,400/oz for end-September 2027, which is $200 higher than its end-June 2027 target. "We believe slowing inflation will become the main theme for the market next year. With the help of favorable base effects and other factors, inflationary pressure is expected to ease, which will benefit gold and other assets that were previously constrained by rate hike expectations." UBS also expects US economic activity to be at or below trend, and the dollar may face pressure then, further supporting gold demand.
Morgan Stanley analyst Amy Gower said in a report last Thursday that gold prices had already reached the bank's Q4 target price ahead of schedule and could climb above $5,000 in 2027, although the process could be volatile. The bank said improving macroeconomic conditions were boosting demand for gold ETFs, as expectations for US Fed interest rate hikes gradually faded, the dollar weakened, and strong central bank buying and stronger physical demand were also supporting gold prices. Despite persistently high long-term yields, gold remained resilient. Morgan Stanley said this indicated investors were increasingly concerned about fiscal risks, including high government debt and potential currency depreciation.
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