Entering May, silver prices continued to rise compared to April. The price increase in May was mainly driven by capital and sentiment. The surge in silver prices in mid-May was influenced by the rise in London copper prices. At the end of April, the broad money (M2) balance was 301.19 trillion yuan, up 7.2% YoY. In May, US national debt reached $35 trillion. Normally, abundant funds would flow into the stock market or other high-return industries, but currently, the return on investment in other projects is below market expectations, so the excess funds flowed into the non-ferrous metals and other resource industries. The rising prices of ores of non-ferrous metals, coupled with tight funds and a continuous decline in silver inventory, provided support for a bullish market. However, after silver prices exceeded 8,000 yuan/kg, market purchasing sentiment weakened significantly. While downstream demand was very strong in April, it was slightly weaker in May. The weakening of market demand, together with the high cost of holding spot silver and the pressure of liquidity, led companies holding spot silver to start selling off. In the last two weeks of May, the spot silver premium turned into a discount, and the discount gradually increased as companies sought to recover funds. However, given a large discount, market purchasing sentiment only slightly strengthened during the price decline. Despite good prices, transactions were extremely poor.
If there are no significant bearish news injections or ultra-hawkish statements from the US Fed to cool the bullish sentiment, the probability of a decline in the average silver price in June is low.
