[Silver Price Review and Forecast]
This week, SMM 1# silver prices swung wildly with the center moving slightly higher. Early in the week, silver prices were pressured lower by stronger-than-expected nonfarm payrolls, with TD pricing at 16,050 yuan/kg. Subsequently, the US dollar weakened for consecutive sessions, and silver prices consolidated higher, rebounding to 16,337 yuan/kg on Thursday, with 1# silver holding above the 16,300 yuan mark and spot quotes shifting from discounts to premiums.
On the macro front, this week saw mixed signals. On the bearish side, US August nonfarm payrolls added 162,000 jobs, far exceeding the expected 55,000, pushing the probability of a September rate hike to nearly 60%, while the 2-year Treasury yield hit a new high since January 2025. The US Treasury's $6 billion long-dated bond buyback fell short of expectations, lifting the 10-year Treasury yield to 4.86%, a near three-year high. The Middle East conflict continued to escalate, with Brent crude breaking above $100, fueling concerns about sticky inflation. On the bullish side, the US dollar index fell for a third consecutive session to around 98.78, reducing the holding cost of precious metals. Global gold ETFs attracted $18 billion in August, the second-largest monthly inflow on record. France announced the full repatriation of its gold reserves, and continued central bank gold purchases provided medium and long-term bottom support for precious metals. Throughout the week, the market awaited Friday's CPI data for direction.
In the spot market, offers remained firm overall this week, with quotes against TD rising from parity to +10 yuan/kg. In Shanghai, quotes against the most-traded SHFE 2610 contract held at discounts of 35-45 yuan/kg. Suppliers showed strong willingness to hold prices firm, with offers on the high side, but downstream buyers largely stayed on the sidelines, preferring to negotiate at lower prices. Smelter EXW offers were on the low side, with national-standard low-priced cargoes available in the market. Early in the week, lower silver prices spurred some buying interest, but after prices rose on Thursday, downstream consumption was again suppressed, and trading sentiment weakened from the previous day. Overall trading was moderate this week, with deals concentrated at slight premiums.
Looking ahead, Friday's CPI data and next week's Fed rate decision will be key drivers of precious metals price fluctuations. The market is in a wait-and-see mode, and prices are expected to remain in a wide consolidation range in the near term. Rate hike expectations remain at 60%, and after the FOMC meeting, the market may shift to trading other drivers.
Next week's price range: SGE futures are seen at 15,500 yuan/kg on the low end and 17,500 yuan/kg on the high end; LBMA futures are seen at $65/oz on the low end and $76/oz on the high end. On spot premiums, quotes against TD are expected to hover around parity. This week, SMM silver ingot Hong Kong spot premiums (against LBMA) closed at discounts of $0.10-0.18/oz, with overall discounts narrowing.
[Silver Weekly Data Commentary]
On weekly inventory, as of September 10, SMM total social inventory stood at 3,871 mt, up 6 mt from the previous period. SHFE inventory fell 2.2 mt WoW, marking a second consecutive week of modest destocking. There were three main reasons: first, lower silver prices stimulated some consumer buying; second, processing trade export orders saw phased shipments; third, producers cut production and showed low willingness to sell, leaving some inventory stranded at factory warehouses. SGE warrants rose 14.79 mt from the previous period, with the pace of inventory buildup slowing. On the international front, both LBMA and COMEX inventories continued their buildup trend.
As of September 9, silver ETF holdings stood at 15,339.36 mt, up 0.39% MoM. The LBMA gold/silver ratio recorded 66. Recent long and short signals have been concentrated mainly in gold, with gold showing more pronounced elasticity. This week, precious metals prices pulled back, market investment enthusiasm cooled slightly, and wait-and-see sentiment strengthened.
