UBS Group AG: Silver Outflows Wipe Out 2025 Buys, Gold Rally's Fundamentals Intact

UBS soundbite: silver outflows wipe out last year’s buys, but gold story stays intact

UBS Group AG warns that early-2026 silver ETF outflows have erased all net buying recorded in 2025, yet the bank stresses that the structural drivers behind a multiyear precious‑metals rally remain in place. Mark Haefele, UBS’s global wealth management chief investment officer, says concerns that gold is losing its role as an effective hedge are overdone, pointing to persistent geopolitical risk, elevated central‑bank purchases and a lower‑for-longer interest‑rate backdrop as underpinning demand.

UBS frames the recent violent swings in precious metals as driven in large part by speculative flows rather than a reversal of fundamentals. The bank highlights that liquidation in exchange‑traded products can quickly unwind prior accumulation in silver and briefly pressure prices, but it expects bullion to resume its advance as strategic buyers and official purchasers continue to accumulate. UBS joins several other major banks in remaining constructive on bullion, arguing that transient volatility opens buying opportunities for clients seeking inflation and tail‑risk protection.

Haefele and UBS advisers are also watching market structure signals — such as option skews and open interest — for signs that speculative selling is abating. As volatility eases and the broad dollar softens, UBS expects positioning to normalise and for demand from wealth managers and retail channels to support a renewed price recovery, even as short‑term ETF outflows distort headline flows in silver.

Record speculative liquidation dents paper positions

Commitment of Traders data show an unprecedented bout of managed‑money selling around month‑end, with Goldman Sachs noting a record reduction in gold futures notional largely driven by liquidation. That episode coincides with a sharp drop in open interest and a brief collapse in speculative longs, amplifying intramonth price moves before systematic strategies and risk‑parity models trigger further commodity selling.

Official and retail buying remains a counterweight

Official sector and retail demand remain robust: the People’s Bank of China continues monthly purchases into a 15th consecutive month, Kazakhstan raises reserves after a large buy, and Indian investors direct more into gold ETFs than equity mutual funds in January. UBS and other institutions see these flows as evidence that underlying demand conditions for bullion are intact despite episodic outflows in silver ETFs.