Silver to Experience a "Roller Coaster" Market This Year? UBS Warning: Prices May Surge Another 25% in the First Half, But Could Fall Back in the Second Half

UBS has significantly raised its price forecasts for silver, platinum, and palladium, predicting a "two-halves" market in 2026—prices will surge strongly in the first half of the year, but return to fundamentals and pull back in the second half. This forecast is based on tighter market conditions and greater investor participation than expected, despite unchanged supply and demand fundamentals.

On January 13, according to Chase Trading Desk, UBS stated in its latest report that silver prices still have about 25% upside from current levels, while platinum and palladium have 5-6% upward potential, but prices will gradually pull back by year end.

UBS particularly emphasized that, although it has raised its price forecasts, the road for silver and other metals is not necessarily smooth, and investors should beware of the risk of corrections.

The report says the key driving factor in this forecast adjustment is the surge in trading activity in the Chinese market. Since the second half of 2025, trading volumes of silver futures in China have soared, and unexpectedly high investor participation is amplifying the impact of market tightness on spot prices.

UBS strategist Joni Teves said market participants will need time to assess how supply and demand adapt to the new price dynamics, which could lead to increased price volatility.

Meanwhile, UBS reiterated its bullish view on gold, expecting further gains in the first half of this year. In the base scenario, there is still about 9% upside from current levels.

Forecasts Raised Sharply: "Roller Coaster" Trend Within the Year

UBS has substantially raised its price forecasts for silver, platinum, and palladium to reflect recent price moves and to account for previously underestimated factors.

The report points out that, while its expectations for supply and demand fundamentals remain unchanged, increased market tightness and investor participation are having a bigger impact on spot prices than previously thought.

New forecasts show that 2026 will be a "two halves" year. Specifically:

First half: Prices will remain strong. According to UBS forecasts, silver is set not only to follow gold but may rise a further 25% from current levels. Platinum and palladium have potential gains of around 5-6%.Second half: As the market reassesses price dynamics and the adaptability of supply and demand, prices will return to fundamentals and narrow towards year-end.

In the longer term, UBS believes silver should continue to follow gold, platinum should resume a gradual upward trend, while palladium should turn weaker as the market moves towards balance and eventually oversupply.

The Path Upward Is Bumpy: Beware Risks of Corrections

UBS warns that strong momentum at the start of 2026 does not mean precious metals will completely avoid consolidation after the sharp rise in Q4 2025.

The bank remains cautious on potential near-term downside risks, especially in the second quarter, which is typically quieter for precious metals markets.

The report also notes that another downside risk comes from the announcement of the Section 232 investigation. If tariffs exemptions for silver and other platinum group metals are confirmed, some inventory stranded in the US could be released, easing some market tightness.

Data shows the 1-month forward silver contract has recently recovered after being at a deep spot premium in Q4.

Aside from this, UBS points out that there is also risk that gains have already been priced in — last Q4's rally and strong early 2026 performance may have set up next year's trend for weak price action and much less volatility.

However, the report says that considering all factors, UBS believes the threshold for corrections has risen, key technical levels have been broken, and trading ranges are now higher and wider than previously expected.

China Is Key: Surging Trading Volume Amplifies Market Impact

Silver, platinum, and palladium led gains in the last few months of 2025 and remained strong into the New Year. UBS notes that activity in the Chinese market is crucial for this year's price trends in silver, platinum, and palladium.

UBS states that since H2 2025, a sharp rebound in Chinese futures trading volume has exceeded expectations and become a key driver pushing prices higher.

The report notes that investors' hunt for yield is also boosting the appeal of alternative assets like precious metals. UBS says gold has long been the main beneficiary, and while this may continue, investment interest has now spread across the entire precious metals sector.

UBS says that with access via the Shanghai Futures Exchange and the Guangzhou Futures Exchange, investors can further increase their exposure to silver and platinum group metals. These convenient access channels make elevated investment interest far more likely than previously thought.

The bank especially points out data showing Chinese silver futures trading volume is much higher than the New York Mercantile Exchange, but silver inventory on Shanghai Futures Exchange is less than 10% of NYMEX inventory and has been declining in recent years. This may reflect weak industrial demand and destocking caused by oversupply in the solar industry.

The report says SHFE data shows silver stocks have been falling since 2020, reflecting weak industrial demand and destocking due to overcapacity in the photovoltaic industry. But after several years of declining inventories, improved industrial demand and rising investment interest may trigger a restocking cycle and push prices higher.

Gold Outlook Unchanged for Now: Upside Risks Are Rising

UBS has recently reiterated its outlook for gold, noting that it may rise further in the first half of this year. The bank’s base scenario shows about 9% upside from current levels.

UBS previously believed that the year-end surge to new highs was more a spillover effect from white metals and the result of thin liquidity during the holidays. However, as 2026 fully unfolds, prices remain strong even after the expected index rebalancing sell-off.

The latest news highlights continued political uncertainty and geopolitical risks, which support gold’s appeal as a diversification tool in portfolios. UBS previously pointed out that if concerns about the Federal Reserve's independence escalate significantly, this would be a key upside risk for the gold outlook.

~~~~~~~~~~~~~~~~~~~~~~~~

The above content is from Chase Trading Desk.

For more detailed analysis, including real-time interpretations and frontline research, please join Chase Trading Desk · Annual Membership

Risk Warning and DisclaimerThe market involves risk; investment should be cautious. This article does not constitute personal investment advice, nor does it take into account individual user's specific investment goals, financial situation, or needs. Users should consider whether any opinions, views, or conclusions in this article fit their particular circumstances. Investment decisions are at your own risk.