On August 5, the international precious metals market saw a long-awaited "violent rally." During US trading hours, London spot silver surged nearly 5% at one point, firmly standing above the $62/oz mark, the highest level since July 7; COMEX silver's main contract closed at $62.255/oz, up 3.34%. Gold also strengthened, breaking above the $4,200 integer level, with COMEX gold closing at $4,308/oz, up 3.74%. For the Singapore silver market, this rally, ignited by US economic data and Middle East geopolitical news, once again confirmed the strong transmission effect of US market pricing on the local precious metals market.
1. Dual Catalysts: Weak ADP and Hormuz Reports
The trigger for this round came from the resonance of two major news catalysts. First, the US July ADP private-sector employment data came in far below expectations — at 44,000, well below the expected 70,000 and below June's downwardly revised 95,000, the smallest increase since January. As a "barometer" for Friday's nonfarm payrolls, the weak ADP significantly heightened concerns about a cooling labor market, while the dollar index and Treasury yields fell together, providing direct pricing support for dollar-denominated precious metals.
Second, there was a signal of geopolitical easing. According to Iranian state media, Iran and Oman may be close to reaching an agreement on navigation through the Strait of Hormuz. Although sources stressed that the deal is unrelated to "immediately reopening the Strait of Hormuz" and that talks are only between the two countries, not involving the US, the market still interpreted it as a sign of marginal easing in geopolitical tensions, and international oil prices fell accordingly. Notably, lower oil prices weakened inflation expectations' support for tightening policy. Under the logic chain of "falling oil prices → easing rate-hike expectations → lower real-rate expectations," gold and silver gained dual upward momentum, with US-session buying volumes clearly expanding.
2. Easing Rate-Hike Expectations: Repricing the Policy Path
According to CME FedWatch data, the market's current bet on the Fed keeping rates unchanged in September has risen to 45.6%, with the probability of a hike falling to 54.4%; but by October, the cumulative probability of a hike rises to 66.5%, and by December it reaches as high as 80.1%. This suggests the mainstream view is that one more hike is still likely this year, but the pace and magnitude of policy are highly uncertain. Fed officials' remarks are also divided — some believe it is time to begin gradually raising rates but not in favor of aggressive hikes; others say they are prepared to support a hike if the disinflation trend fails to resume, but ultimately may not need to hike.
For local Singapore investors, the Fed's policy path directly affects the real purchasing power of dollar-denominated precious metals under the Singapore dollar exchange rate. Every marginal change in US rate expectations is transmitted to the Singapore gold market through the dollar index and Treasury yields, forming the classic linkage pattern of "US pricing, Asian follow-through." Many institutions believe that after the earlier deep correction, precious metals have already partially priced in hawkish expectations, leaving limited room for further valuation downward revision. If US inflation and employment data continue to fall in July-August, the Fed may pause hikes in the second half, and gold and silver could see a repair rally in August-September.
3. Diverging Fund Flows: Gold ETF Adds, Silver ETF Holds
On the fund side, SPDR Gold, the world's largest gold ETF, saw holdings increase by 4.851 tonnes on August 5 to 1,014.148 tonnes, indicating institutional capital returning to gold. Meanwhile, iShares Silver, the world's largest silver ETF, kept holdings unchanged at 15,130.82 tonnes. The "one increase, one flat" in gold/silver ETF holdings reflects that funds remain cautious on silver: on one hand, silver has both industrial and financial attributes, with global photovoltaic, electronics, and electrical industrial demand providing underlying support; on the other hand, given lingering macro uncertainty, funds prefer to first position in more liquid gold, while silver waits for clearer signals.
Shenyin & Wanguo Futures also noted that silver, platinum, and palladium, which combine financial and industrial attributes, generally follow the precious metals complex, with further upside elasticity depending on industrial demand. In other words, for silver to start an independent trend, it still needs a substantial recovery in global manufacturing sentiment. In terms of the Singapore market's actual performance, local silver quotes moved higher alongside the US rally, but the gains were relatively moderate and mostly followed the trend, with no obvious signs of speculative overheating.
4. Singapore Perspective: Local Silver Pricing Infrastructure Accelerates
In Singapore, this round of US-market moves quickly transmitted to local silver spot quotes, with SGD-denominated silver bar and coin prices rising in tandem during the night session, and physical retail inquiries notably active. As a hub for precious metals trading and storage in Asia, Singapore is accelerating the improvement of its local silver pricing infrastructure — in May this year, Abaxx Exchange officially launched the "Singapore Silver" (SSP) physically delivered futures contract, based on 99.99% high-purity silver with delivery in Singapore, aiming to provide Asian industrial participants with more direct regional price discovery and hedging tools. This setup enables the Singapore market to absorb US-market shocks more timely and completely, and gives local investors richer risk management tools during sharp US-session volatility.
Notably, despite the sharp rise in US silver prices, local spot premiums did not over-expand, indicating ample liquidity reserves in the Singapore silver market and that physical supply can smoothly absorb demand fluctuations. This is in sharp contrast to the earlier situation at the start of the year when silver premiums spiked and physical supply tightened, and it also confirms Singapore's market depth and resilience as a regional precious metals hub.
5. Technicals and Outlook: $63 Becomes Key Watershed
On the technical front, London silver quickly probed around $62.3 after breaking the psychological $60 level, with $63 above as key resistance; if effectively broken, the market could look toward the $65-70 region; below, $60-61 forms strong support. For gold, London gold has broken through the $4,200 resistance area and stood above the 60-day moving average, turning short-term stronger, with next resistance at $4,400 then $4,500, and support around $4,200. For Singapore silver traders, the gain or loss of the $63 level will be the key watershed for judging short-term bull/bear forces.
The biggest suspense this week is the US July nonfarm payrolls report due Friday evening. If nonfarm data continues ADP's weak tone, it will further confirm the labor-market cooling view, and gold and silver may extend the uptrend; conversely, if the data surprises to the upside, it could rekindle rate-hike expectations and bring profit-taking pressure on recent gains. In addition, the late-August global central bank symposium, the Bank of Korea's first purchase of domestically refined gold bars in 13 years for reserves, and geopolitical developments during the US-Iran negotiation window will all be key variables affecting the direction of precious metals in the second half.
Risk Warning
Risks to watch include: pulse-like impacts on oil prices and safe-haven premiums from repeated geopolitical escalations during the 60-day US-Iran negotiation window, more hawkish-than-expected Fed hikes, and market liquidity risks. For Singapore silver investors, while enjoying the benefits of the US-market rally, they should also maintain position management and stop-loss discipline against significantly amplified volatility, and closely monitor the latest nonfarm data and Middle East developments.
