Analysts Warn of Potential Price Correction in Precious Metals

According to PANews, the rapid surge in precious metal prices, including silver, has prompted analysts to caution about a potential price correction. Analysts from Capital Economics have expressed concerns that the current price levels of precious metals are difficult to justify based on fundamental factors. They predict that as the enthusiasm for gold diminishes, silver prices may decline to approximately $42 by the end of next year. UBS has highlighted that the swift rise in precious metal prices is largely due to insufficient market liquidity, suggesting a possible quick reversal. The firm emphasizes that short-term risks in precious metal trading have significantly increased, especially given the recent highs in gold prices, which may lead short-term investors to take profits. The thin liquidity at the year's end could exacerbate price volatility, making short-term trends harder to interpret. Wang Yanqing, Chief Analyst of Precious Metals at CITIC Futures, notes that from a fundamental perspective, there have been no significant changes in the factors affecting precious and base metals in the short term. While long-term factors such as 'de-dollarization' provide positive support, the rapid and short-term price increases have overly traded on these long-term factors. The heightened speculative sentiment poses potential risks to the stable operation of the market.