US August CPI Data Released; Silver Market Sees Strong Wait-and-See Sentiment as Futures Consolidate [SMM Daily Review]

Today, SMM's 10:00 am price for SGE Ag (T+D) was 15,620 yuan/kg, with the premium range quoted from parity to +10 yuan/kg against TD, and the weighted average price was 2.61 yuan/kg.

On the macro front, US August CPI data came in with headline CPI at 3.4% YoY, up 0.4% MoM; core CPI rose 0.3% MoM, above market expectations of 0.2%, showing sticky inflation again. The energy component was the main driver boosting headline CPI, while the pace of service-side price pullback slowed. After the data release, the probability of a 25bp rate hike at the September FOMC meeting jumped sharply, and the market repriced the US Fed's policy path. US Treasury yields shot up in the short term, and the US dollar index consolidated with volatility. Rising rate hike expectations driven by hotter-than-expected inflation weighed on precious metals in the short term; however, the market has largely priced in this rate hike expectation, with signs of marginal digestion of bearish factors. Precious metals remained range-bound amid the conflicting dynamics of resilient inflation boosting hedging demand and high interest rates suppressing valuations, with market focus on this week's FOMC meeting.

In the spot market, as the spot-futures price spread narrowed, morning quotes in Shanghai were concentrated at a discount of 25-20 yuan/kg against the most-traded SHFE 2610 contract. Smelter EXW offers were on the low side, and downstream purchases were mainly based on negotiation as needed, with transactions skewed toward the lower end of quotes.

Overall, the market is in a key verification window before the FOMC meeting, with heavy wait-and-see sentiment and mediocre trading activity. Today's premium quotes against the most-traded SHFE 2610 contract were at a discount of 30 to 20 yuan/kg, with transactions concentrated near parity against SGE Ag (T+D).