Investing.com -- UBS reaffirmed its positive outlook on silver, forecasting a price jump for the precious metal in the coming months despite recent declines.

Silver prices temporarily fell below $30 per ounce, and the gold-silver ratio hit approximately 100 times.

“We think silver prices below $30/oz are unlikely to last over the next 3-6 months,” strategists Dominic Schnider and Wayne Gordon said in a note.

The bank reiterates its forecast that silver should trade around $36-38 per ounce in the second half of the year.

UBS attributes the recent drop in silver prices to risk-off sentiment in global markets, largely due to U.S. President Donald Trump’s trade policies, which have led to major corrections, particularly in equities.

Strategists said this market reaction reminds them of silver’s performance during the global financial crisis (GFC) and the COVID-19 pandemic when its price also slipped and the gold-silver ratio spiked. However, they believe the upcoming global economic headwinds “are unlikely to be of a similar magnitude.”

“Hence, we caution against drawing too many parallels and turning negative on the metal,” they added.

The strategists expect a rise in investment demand to offset the negative effects. The prospect of further rate cuts by the Federal Reserve, which could go deeper than the expected 3-3.25%, is seen as a positive trigger for silver.

Such policy adjustments could provide broad support for precious metals and help stabilize or reverse trends in the silver futures market, strategists said.

Moreover, more stable exchange-traded fund (ETF) flows are likely to support sustained investor interest in silver over the longer term, as reflected to some extent by the muted increase in the metal’s option volatility.

Given this backdrop, UBS prefers to stay long silver, looking past the current risk-off market trends.

The bank views the current price levels as attractive for adding silver exposure, forecasting higher prices ahead due to lower opportunity costs and a potentially weaker U.S. dollar over time.