UBS Group believes that driven by a surge in trading activity in the Chinese market and investor enthusiasm, silver prices may rise by an additional 25% in the first half of the year. However, in the second half, prices are likely to retreat as the market returns to fundamentals. Market participants will need time to assess how supply and demand factors adapt to the new price dynamics, which could lead to heightened volatility. The bank reiterated its bullish view on gold, stating that it will continue to rise in the first half of this year. Under the base-case scenario, it is projected to have an upside potential of approximately 9% from current levels.
UBS Group has significantly raised its price forecasts for silver, platinum, and palladium, predicting a 'two-phase' market trend in 2026 — strong price increases in the first half of the year followed by a retreat in the second half as prices revert to fundamentals. This forecast is based on the impact of market tightness and investor participation exceeding expectations, despite no change in supply and demand fundamentals.
On January 13, according to TradingView, UBS Group stated in its latest research report that silver prices have approximately 25% upside potential from current levels, while platinum and palladium could see gains of 5-6%, but prices are expected to gradually decline by the end of the year.
The bank particularly emphasized that although price forecasts have been revised upward, the rise in metals such as silver will not be smooth, warning of the risk of pullbacks.
The report noted that the core driver of 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, with unexpected investor participation amplifying the impact of market tightness on spot prices.
Joni Teves, a strategist at UBS Group, stated that market participants need time to assess how supply and demand factors adapt to the new price dynamics, which could lead to increased price volatility.
At the same time, the bank reiterated its bullish view on gold, expecting it to continue rising in the first half of this year, with approximately 9% upside potential under the base-case scenario from current levels.
Significant forecast revision: A 'rollercoaster' trend within the year
UBS Group has substantially raised its price forecasts for silver, platinum, and palladium to reflect recent price movements and account for previously underestimated factors.
The report pointed out that although the bank's expectations for fundamental supply and demand remain unchanged, the impact of market tightness and rising investor participation on spot prices has exceeded expectations.
The new forecast indicates that 2026 will be a 'two-phase' year. Specifically:
First Half: Prices are expected to remain strong. According to UBS Group's forecast, silver is not only set to follow the trajectory of gold but also has the potential to rise by an additional 25% from current levels. Meanwhile, platinum and palladium could see potential increases of around 5-6%.
Second Half: As the market reassesses price dynamics and the adaptability of supply and demand, price movements will revert to fundamentals and gradually narrow by the end of the year.
In the longer term, UBS Group believes that silver should continue to track gold’s performance, platinum should resume a gradual upward trend, and palladium is likely to weaken as the market moves toward balance and eventually experiences a surplus.
A volatile path to growth: Beware of correction risks
UBS Group warns that the sustained strength seen at the beginning of 2026 does not mean precious metals have completely avoided consolidation after a significant rally in Q4 2025.
The bank remains cautious about potential near-term downside risks, particularly during Q2 when the precious metals market is typically subdued.
The research report points out that another downside risk stems from announcements related to Section 232 investigations. If exemptions from tariffs on platinum group metals such as silver are confirmed, it could release some inventories stranded in the U.S., easing market tensions to some extent.
Data shows that after falling into deep backwardation in Q4, the one-month forward contract for silver has recently recovered somewhat.
Moreover, the bank notes there is a risk that gains have already been priced in – last year’s Q4 rebound and early 2026 strength may foreshadow weaker price momentum and significantly reduced volatility over the next year.
However, the research report states that considering all factors, UBS Group believes the threshold for a correction has risen, key technical levels have been breached, and the trading range is now higher and wider than previously anticipated.
China Factor Becomes Key: Surge in Trading Volume Amplifies Market Impact
Precious metals such as silver, platinum, and palladium led the market rally in the final months of 2025 and maintained strength into the new year. UBS Group noted that activity in the Chinese market is crucial for the price trends of silver, platinum, and palladium this year.
UBS Group stated that since the second half of 2025, the sharp rebound in China’s futures trading volumes has exceeded expectations, becoming a key factor driving prices higher.
The research report highlighted that investors' pursuit of returns has also increased the attractiveness of alternative assets like precious metals. UBS Group believes that gold has been the primary beneficiary, but investment interest has now spread across the entire precious metals sector.
UBS Group noted that access to silver and platinum group metals through the Shanghai Futures Exchange and Guangzhou Futures Exchange allows investors to further increase their exposure to precious metals. This convenient access raises the possibility of investment interest exceeding prior expectations.
The bank specifically pointed out that data shows trading volumes of silver futures in China far exceed those on the New York Mercantile Exchange, but silver inventories at the Shanghai Futures Exchange are less than 10% of those on the New York Mercantile Exchange and have been declining in recent years. This may reflect destocking due to weak industrial demand and overcapacity in the solar industry.
The research report stated that data from the Shanghai Futures Exchange (SHFE) indicates an overall downward trend in silver inventories since 2020, reflecting destocking caused by weak industrial demand and overcapacity in the photovoltaic industry. However, after years of inventory reduction, improvements in industrial demand and rising investment interest could trigger a restocking cycle, thereby pushing prices higher.
Gold Outlook Remains Unchanged: Upside Risks Are Rising
UBS Group recently reiterated its outlook for gold, noting that it may rise further in the first half of this year. The bank’s baseline scenario suggests there may be approximately 9% upside from current levels.
The bank previously believed that the year-end rally to new highs might have been more a result of spillover effects from white metals and thinner liquidity during the holiday period. However, as 2026 unfolds, prices remain strong even after the anticipated index rebalancing sell-off.
The latest developments have highlighted ongoing political uncertainty and geopolitical risks, reinforcing the appeal of gold as a portfolio diversification tool. UBS Group had previously noted that a significant escalation in concerns over the Federal Reserve's independence would be a key upside risk for gold’s outlook.
