Following last Friday's historic plunge, precious metals prices continue to fluctuate. Investment banks are increasing their long positions in gold, yet they are cautioning investors against going all-in on silver.

During Thursday's Asian trading session, spot gold fell sharply again, briefly dropping below the $4,800 mark and erasing the rebound gains from Tuesday and Wednesday, during which gold prices rose by 6.13% and 0.36% respectively. Spot silver weakened in tandem, at one point plunging by 16%, despite having gained 7.53% and 3.44% on Wednesday and Tuesday. This volatility stems from a recent intense price rollercoaster: last Friday saw a broad-based sell-off in precious metals, with gold falling over 9% and silver crashing more than 26%.

Most investors attributed the sell-off to the nomination of Kevin Warsh for the next Federal Reserve Chair, with the downtrend persisting into this week. A rebound for both metals only materialized on Monday after significant capital exited technology and software stocks and flowed back into traditional safe-haven assets like gold.

The bull market for gold and silver began in early 2025, fueled by their safe-haven appeal amid rising geopolitical tensions, alongside market speculation that gold could potentially replace the US dollar as the global reserve currency as the dollar weakens. Subsequently, concerns about potential White House interference undermining Federal Reserve independence further propelled the rally in precious metals. Silver prices also received a boost from its industrial uses and short-term enthusiasm from retail investors and related exchange-traded funds (ETFs).

The gold bull market is still seen as ongoing. Many market observers remain optimistic about further upside for gold. Strategists at UBS Group AG stated that the recent sell-off represents a normal fluctuation within a structural uptrend, not the end of the bull market.

In a report issued Monday evening, the bank suggested that gold is still in the middle-to-late stages of its bull market—transitioning from a steady ascent to new highs, but now facing intermittent corrections of 5% to 8%. UBS Group AG noted that the four factors typically signaling the end of a gold bull market—persistently high real interest rates, structural US dollar strength, stabilization in geopolitical tensions, and restored central bank credibility—have not yet appeared.

UBS Group AG forecasts that the gold price will reach $6,200 next month before settling at $5,900 by year-end, and the bank maintains its long position. Its strategists added, "The recent spike in price volatility also creates opportunities for yield-seeking investors to profit from this market environment."

Analysts at Goldman Sachs, in a Tuesday report, also maintained a bullish stance on gold despite the sell-off: "We continue to see significant upside risks to our $5,400/oz forecast for gold by December 2026."

Goldman Sachs's forecast is based on two key supports: continued gold reserve accumulation by central banks and increased buying of gold ETFs by private investors against a backdrop of Federal Reserve interest rate cuts.

Bank of America is also bullish on gold, anticipating prices could reach $6,000 per ounce in the coming months. The bank's team, in a Tuesday report, noted they have been staunchly bullish since gold was below $2,000/oz in 2023 but cautioned, "we have some concerns about the recent speed of the price advance and the accompanying rise in volatility."

"We are also closely watching several scenarios that could create more headwinds for gold," the bank added, pointing to two key uncertainties: the policy direction of the Trump administration following the November midterm elections and "whether the current administration can successfully implement its various policies going forward."

Investment Banks Advise Caution on Silver Investments. In a separate report over the weekend, UBS Group AG stated plainly during the precious metals sell-off that silver prices need to fall further "to become attractive to us."

"For assets with volatility of 60% to 120%, we require an expected return of 30% to 60% to warrant a long position, a threshold silver currently does not meet," UBS Group AG said. "Therefore, silver needs a lower price to become attractive... We believe investors should carefully assess the appropriate required return for an asset exhibiting such high recent volatility."

Silver had a standout performance in 2025, gaining nearly 150% for the year and significantly outperforming gold, but the recent sell-off has pushed its price down more than 30% from the record high set just days ago. UBS Group AG predicts spot silver will recover to the $100 level next month before falling back to $85 per ounce by year-end.

Although silver possesses safe-haven qualities, unlike gold, it is a key raw material for consumer goods like computers, solar panels, medical devices, and automobiles. The UBS Group AG team noted this dual nature complicates its price dynamics—because rising silver prices can dampen its industrial demand.

"Over 50% of silver demand comes from industrial applications. We believe the current price level... could lead to lower industrial demand over the long term as end-users seek to optimize usage and reduce input costs," UBS Group AG stated.

Goldman Sachs analysts Lina Thomas and Daan Struyven also expressed a much more cautious stance on silver compared to gold, citing a key reason: tightening supply liquidity in the crucial London silver market.

"Persistent liquidity shortages in the London market are exacerbating extreme price volatility in silver, beyond the volatility induced by gold-like call option structures," the analysts said, adding, "We continue to recommend volatility-averse investors exercise caution regarding silver."

While Bank of America strategists maintain a somewhat positive outlook on silver's prospects, they also highlighted potential headwinds—such as a potential decline in solar panel demand.

"Specifically for silver, its price had previously deviated from our estimated fair value range of $60-70/oz, so this correction is not entirely surprising," the bank said. "However, we still forecast the silver market will remain in a supply deficit, a fundamental factor that should ultimately provide support for the price."