Non-farm payrolls beat expectations, pressuring silver prices; central bank gold purchases provide medium and long-term support [SMM Daily Commentary]

Today, SMM's 10:00 am price for the SGE Ag (T+D) is 16,050 yuan/kg, with the premium/discount range quoted at parity to +10 yuan/kg against TD, and the weighted average price at 6.2 yuan/kg.

On the macro front, US non-farm payrolls added 162,000 jobs in August, far exceeding market expectations of around 55,000, with June and July combined revised up by 55,000. Following the data release, expectations for US Fed interest rate hikes strengthened significantly, with the probability of a September hike rising to nearly 60%, and the 2-year US Treasury yield touching 4.42% intraday, a new high since January 2025. Meanwhile, France announced the full repatriation of its national gold reserves, marking another milestone in the wave of countries bringing gold home. Over the past 12 months, 19% of central banks increased the proportion of gold reserves held domestically (versus just 7% a year earlier), and the number of central banks storing gold in New York and London vaults continued to decline, forming a core structural driver supporting medium and long-term gold price gains. In the near term, precious metals have entered a "non-farm payrolls-inflation-CPI" three-factor game window, with medium and long-term support remaining strong after bearish factors are digested.

In the spot market, the decline in silver prices stimulated a slight recovery in transactions. Today, suppliers showed strong sentiment to hold prices firm, with offers on the high side, concentrated at a discount of 35-30 yuan/kg against the most-traded SHFE 2610 contract. However, downstream buyers leaned toward bargaining, and actual transaction prices may skew toward the lower end. Morning quotes in Shanghai were mainly around TD +5 yuan/kg. Today's premium/discount quotes against the most-traded SHFE 2610 contract were at a discount of 40 to 30 yuan/kg.

Overall, stronger-than-expected non-farm payrolls data pressured precious metals, with bearish sentiment dominating in the short term and rate hike probabilities rising. In the spot market, offers remained firm and stayed high today, with transactions concentrated at parity and slight premium levels.