Silver Prices Rise Then Fall, Weekly Chart Closes Lower as Bulls and Bears Intertwine, Awaiting New Variables to Break the Deadlock [SMM Silver Weekly Review]

[Silver Price Review and Forecast]

This week, SMM 1# silver prices rose initially before falling back, with the weekly candlestick closing as a medium bearish candle. Early in the week, prices rebounded sharply to 16,188.5 yuan/kg, then consolidated mildly above 16,100 yuan, before pulling back sharply to around 15,600 yuan/kg late in the week, giving back all weekly gains.

On the macro front, this week saw mixed signals, turning bearish in the latter half. On the bullish side, after the September rate hike landed, the market entered a digestion phase, with the long-end US Treasury yield repeatedly testing the 5% mark. Trump confirmed that US and Iranian officials held a three-hour meeting in New York and described it as productive, expressing confidence that a deal could be reached after the midterm elections. Peace talk expectations once drove precious metals slowly higher. On the bearish side, Fed officials delivered a barrage of hawkish remarks, with Musalem saying "further rate hikes are needed" and Goolsbee stressing the need for clear action. Thursday's US September services PMI hit a near five-year high, while the manufacturing PMI hit a more than four-year high. The probability of another 25 bp hike in October surged from 53% to 75%, and the US dollar index climbed above 101. Additionally, the Iranian president's tough rhetoric at the UN General Assembly and the US delegation's mid-session walkout reignited geopolitical tensions, sending silver prices tumbling under pressure.

In the spot market, driven by pre-holiday stockpiling demand for the dual festivals, downstream consumption recovered somewhat this week, with transactions improving at one point. Quotes were concentrated at parity to a slight premium against TD, while Shanghai quotes against the most-traded SHFE 2610 contract held at a discount of 30 to 20 yuan/kg. Early in the week, stockpiling orders saw heavy shipments, and silver's consolidation also lent some confidence to the market, with moderate trading. Mid-week, as stockpiling orders were gradually settled and closed out, inquiries turned somewhat weak. After Thursday's sharp drop in silver prices, downstream inquiries stabilized, but holiday sentiment was thick, with transactions concentrated near parity, and overall trading turned more sluggish than early in the week.

Looking ahead, silver currently lacks clear macro guidance. US debt expansion and the recurring US-Iran conflict continue to fuel inflation and safe-haven premiums, forming a pessimistic medium-term backdrop. However, rate hike expectations are already fully priced in, and central bank gold buying still provides a floor, so downside is equally limited. In the short term, silver is likely to maintain wild swings while awaiting new catalysts to break the stalemate.

For next week's price range, SGE futures are seen at a low of 15,200 yuan/kg and a high of 16,200 yuan/kg; LBMA futures are seen at a low of $61/oz and a high of $66/oz. On spot premiums, market quotes against TD are expected to run around parity, with trading in the final three days of the month leaning sluggish. This week, the SMM silver ingot Hong Kong spot premium (against LBMA) quotation range was at a discount of $0.1 to $0.05/oz, with import buying offers dominating.

[Silver Weekly Data Commentary]

As of September 23, silver ETF holdings stood at 15,350.6 mt, up 0.46% MoM. The LBMA gold/silver ratio recorded 66, with frequent bullish and bearish signals recently, and silver prices showing high volatility elasticity.

On weekly inventories, as of September 24, SMM total social inventory stood at 3,897 mt, up 14 mt from the previous period. Among this, SHFE inventory rose 36.7 mt WoW. Although consumption was strong early in the week, the overall degree of destocking was limited. This month, the import window opened, with imported silver ingots mostly small-sized and registered as domestic warrants, leading to inventory buildup for two consecutive weeks. SGE warrants fell 26.8 mt from the previous period. In the international market, LBMA continued to build inventory, while COMEX inventory edged up after one week of destocking, with overall inventory still at elevated levels.