Analysts warn that prices of precious metals such as silver are on the verge of a precipice.
PANews reported on December 28th that, according to Jinshi, as prices of precious metals such as silver continue to surge, analysts are warning that precious metal prices are on the "edge of a cliff," and the risk of a correction is accumulating. Capital Economics analysts wrote in a report, "Precious metal prices have risen to levels we believe are difficult to explain with fundamentals." They predict that as the frenzy for gold subsides, silver prices may fall back to around $42 by the end of next year. UBS warned that the current rapid rise in precious metal prices is largely due to insufficient market liquidity—meaning a rapid pullback is very likely. UBS emphasized that short-term risks in precious metal trading have increased significantly, and given that gold prices have reached new highs, the risk of short-term investors taking profits is also substantial. The thin liquidity at the end of the year "may exacerbate price volatility," making short-term trends more difficult to interpret. Wang Yanqing, chief precious metals analyst at CITIC Securities Futures, said that from a fundamental perspective, there have been no significant changes in the factors affecting precious metals and non-ferrous metals in the short term. Although there are long-term positive factors such as "de-dollarization" in the market, the short-term and rapid rise has obviously over-traded the long-term positive factors, and the high level of speculative sentiment has brought potential risks to the stable operation of the market.
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