Precious metals have stayed underpinned even as geopolitical tensions intensified, and UBS is advising investors to sell downside protection on both gold and silver rather than prepare for sharp price declines. The bank says elevated market turbulence has increased opportunities in the options market and that macroeconomic conditions continue to support both metals.
UBS strategists, led by Dominic Schnider, set out a bullish case for gold. In a note, they wrote: "We retain a constructive outlook for gold, driven by expectations of lower interest rates over time, a weaker dollar, and ongoing central bank demand." The bank added a price target of USD 6,200/oz over the coming months.
Given that outlook, UBS prefers strategies that profit if prices remain above specified floor levels rather than positioning for a decline. The bank said that, with its price view, it likes "to sell the metal's downside price risks below USD 4,700/oz over the next one month."
Selling downside protection is commonly executed through put options. That approach lets investors collect option premium income while effectively wagering that the underlying price will stay above the strike or threshold over the life of the contract. UBS's recommendation therefore signals confidence that gold is unlikely to drop beneath the USD 4,700 level within the coming month.
UBS applies a similar stance to silver. The bank said silver continues to benefit from the same supportive macro drivers even amid recent geopolitical developments. UBS noted: "We believe the fundamental drivers for higher silver prices remain intact," and pointed to "lower nominal and real interest rates, global debt concerns and USD debasement considerations alongside our expectation for global economic growth to stay robust in 2026."
Volatility in silver markets has risen sharply as investors reassess risks across asset classes. UBS observed that option volatility for silver has climbed to around 70 percent, which the bank said creates attractive conditions for options-based strategies. Consequently, UBS said it likes "to sell the metal's downside price risks below USD 65/oz over the next one month."
UBS's guidance reflects two related themes: that macroeconomic forces remain supportive of precious-metals demand and that recent spikes in volatility make put-selling strategies more appealing to investors seeking to monetize that view. The bank's recommended thresholds - USD 4,700/oz for gold and USD 65/oz for silver - are presented as near-term limits under which downside risk is seen as limited.
Investors weighing these options-based tactics should note that the bank's strategy centers on collecting premiums while accepting the obligation to buy the metal at the strike should prices fall below the specified levels during the contracts' term. UBS's note frames this as a way to benefit from prices holding above those levels amid an environment where geopolitical tensions have pushed some market participants toward safe-haven assets.