Precious metals rally: UBS warns of profit-taking risk into holidays

Investing.com -- Gold, silver and platinum have surged to fresh record highs ahead of the year-end holiday period, but UBS is urging caution as prices accelerate rapidly on thin liquidity.

Analyst Joni Teves noted that precious metals “have been rising sharply in the lead up to the year-end festive period,” with platinum posting gains of about 40% in December and palladium up roughly 34%.

UBS believes the scale of the rally appears “somewhat unhinged,” arguing that it is “difficult to pinpoint a precise trigger” that fully explains the strength and speed of the move.

While a weaker dollar, tightening in silver and PGMs, and supportive risk sentiment across commodities have all helped, the bank said these factors are not “convincing enough to explain the extent of the rally.”

The firm noted that platinum’s jump has coincided with strong ETF inflows, tightening forward markets and heavy trading volumes in Guangzhou, while silver has been buoyed by copper prices and has “entered uncharted territory.”

UBS also believes recent geopolitical headlines have reinforced gold’s safe-haven appeal.

But the bank highlighted rising short-term risks. “Given the extent of the rise in prices to reach new records, the risk of profit-taking from short-term players is also high,” it stated.

Thin year-end liquidity is “likely amplifying the price action,” making near-term moves harder to interpret.

Despite the caution, Teves said the bank’s analysts “maintain our bullish stance on precious metals into 2026,” citing “considerable upside risks” to its forecasts.

However, the lack of clarity around the rally’s drivers means the bank prefers “to stay on the sidelines for the time being.”

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