Analysts Warn: Precious Metal Prices Are Now at a 'Cliff Edge,' With Downside Risks Building

BlockBeats News, December 28th, as the prices of silver and other precious metals continued to soar, some analysts warned that the prices of precious metals are now standing on a "cliff edge" and the risk of a pullback is accumulating. Analysts at Capital Economics wrote in a report: "The prices of precious metals have risen to a level that we believe is difficult to explain with fundamentals." They expect that as the frenzy for gold subsides, the price of silver could fall to around $42 by the end of next year. UBS warned that the rapid rise in current precious metal prices is largely due to market illiquidity — meaning a quick reversal is very likely.

UBS emphasized that the short-term risks of precious metal trading have significantly increased, given that the price of gold has risen to new highs, there is also a high risk that short-term investors may take profits. The thin liquidity at the end of the year "may exacerbate price fluctuations," making short-term trends more difficult to interpret. Wang Yanqing, Chief Analyst of Precious Metals at CITIC Futures, stated that from a fundamental perspective, the short-term impact factors of precious metals and non-ferrous metals have not changed significantly. Although there are long-term bullish factors such as "de-dollarization" in the market, the short-term and rapid rise has clearly overtraded the long-term bullish factors, with speculative sentiment running high, posing potential risks to the market's stable operation. (FX678)