PPI Exceeds Expectations and ECB Raises Rates, Silver Prices Plunge Over 5% [SMM Daily Review]

Today, SMM's 10:00 am price for the Shanghai Gold Exchange Ag (T+D) is 15,430 yuan/kg, with the premium/discount range quoted at TD-5 to +5 yuan/kg and a weighted average price of -0.89 yuan/kg.

On the macro front, the European Central Bank raised the deposit facility rate by 25 bp to 2.50%, the main refinancing rate to 2.65%, and the marginal lending rate to 2.90%, while also raising its economic growth forecasts for this year and next year and core inflation expectations for next year and the year after. The tightening linkage among major global central banks is putting rate-side pressure on precious metals. US August PPI came in at 5.4% YoY, above the expected 5.3%, with the prior reading revised from 4.70% to 4.8%. The stronger-than-expected PPI pushed up market expectations for a Fed rate hike next week. Short-term bearish factors dominated precious metals, with spot gold falling below $4,300 and silver plunging more than 5%.

In the spot market, lower silver prices helped some transactions recover. Shipments increased notably from yesterday to this morning, which also drove the spot-futures price spread to narrow. Traders showed strong quoting sentiment, with offers slightly raised. Morning quotes in Shanghai were concentrated at a discount of 30 yuan/kg against the most-traded SHFE 2610 contract. Smelter EXW offers were on the low side, and market deals leaned toward parity, with moderate trading activity. Today's premium/discount quotes against the most-traded SHFE 2610 contract were at a discount of 35 to 25 yuan/kg.

Overall, the focus tonight is on US August CPI data at 20:30. In the medium term, central bank gold purchases, weakening US dollar credit, and geopolitical structural risks remain the underlying logic for bulls. In the spot market, today's offers were concentrated at parity, with lower silver prices stimulating demand and transactions leaning firm.