Analysts warn: Precious metal prices are on the "edge of the cliff," and the risk of a correction is accumulating.

On December 28, as the prices of precious metals such as silver continued to soar, some analysts warned that precious metal prices are on the “edge of a cliff,” and the risk of a correction is accumulating. Kepler Macro analysts wrote in their report: “Precious metal prices have risen to levels that we believe are difficult to explain with fundamentals.” They expect 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 rapid rise in precious metal prices is largely due to insufficient market liquidity — which means a quick pullback is very likely. UBS emphasized that the short-term risks in precious metal trading have significantly increased, given that gold prices have hit new highs, and the risk of short-term investors taking profits is also high. The end-of-year thin liquidity “may have exacerbated price volatility,” making short-term trends more difficult to interpret. Wang Yanqing, Chief Analyst of Precious Metals at CITIC Construction Investment Futures, stated that from a fundamental perspective, there have been no significant changes in the influencing factors for short-term precious metals and non-ferrous metals. Although there are long-term bullish factors such as “de-dollarization,” the short-term and rapid rise has clearly over-traded the long-term bullish factors, with speculative sentiment high, posing potential risks to market stability. (Jin10)