①UBS Group has reminded investors that the prices of gold, silver, and platinum have surged to historical highs. However, recent gains may be “excessive” and are primarily driven by insufficient market liquidity, posing a risk of rapid pullback; ②Analyst Joni Teves noted that short-term trading risks for precious metals have increased. While maintaining a bullish stance on precious metals through 2026, she advised investors to adopt a wait-and-see approach for now.
Cailian Press, December 25 (Edited by Liu Rui) As the end of 2025 approaches, prices of gold, silver, and platinum have soared to new historical highs. However, UBS Group has cautioned investors to remain prudent, as it believes the recent price increases in precious metals have become somewhat “excessive.”
UBS Group also warned that the rapid rise in precious metal prices is largely due to insufficient market liquidity – meaning a potential for swift reversals.
Have Precious Metals Overshot in Year-End Rally?
Precious metals analyst Joni Teves pointed out that precious metals “have already risen sharply ahead of the year-end holiday season,” with platinum gaining approximately 40% in December, while palladium rose by about 34%.
UBS Group considers the scale of this rally to be “somewhat abnormal” and stated that it is difficult to identify a specific trigger to fully explain such a strong and rapid upward trend.
While a weaker US dollar, tightening futures prices for silver and precious metals, and improved overall risk appetite for commodities have all contributed to driving up prices, UBS Group believes these factors are still “insufficient to fully account for the magnitude of this rally.”
The company pointed out that the rise in platinum prices aligns with substantial inflows into exchange-traded funds (ETFs), tightening of the forward market, and the recent launch of platinum futures contract trading by the Guangzhou Futures Exchange.Futures Exchange,Silver, on the other hand, has been supported by copper prices and has 'entered uncharted territory.'
UBS Group also noted that recent international political news further underscores gold’s role assafe-haven assetssuch as gold.
Short-Term Risk of Correction Exists
UBS Group emphasized that short-term risks in precious metals trading have significantly increased: 'Given that gold prices have risen to new highs, the risk of short-term investors taking profits is also substantial.'
UBS Group also noted that thin liquidity at year-end 'could exacerbate price volatility,' making short-term trends more difficult to interpret.
Nevertheless, Teves stated that the bank's analysts 'continue to maintain a bullish stance on precious metals for 2026,' pointing out that their forecasts carry 'considerable upside risk.'
However, due to the lack of clarity regarding the drivers of this rally, the bank currently leans towards 'temporarily adopting a wait-and-see approach.'
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Editor/KOKO