(Yicai) Oct. 20 -- International gold and silver prices have reached new historic highs and then experienced a general pullback on the last trading day, prompting analysts to warn about potential short-term volatility risks.

The spot gold price in London peaked at USD4,379.38 per ounce on Oct. 17 and then closed down 1.8 percent at USD4,247.17. Meanwhile, the spot silver price surged to USD54.44 per ounce intraday and then closed 4.1 percent down at USD51.87.

Precious metal prices rallied in October for multiple reasons, Gu Fengda, chief analyst at Guosen Futures, told Yicai. From a macroeconomic perspective, expectations for the Federal Reserve to cut rates have been the main factor, with the resulting weakness in the US dollar and declining real rates enhancing gold's appeal as a non-yielding asset, he explained.

Moreover, heightened geopolitical uncertainties have maintained strong safe-haven demand, and sustained inflows from official reserves and institutional investors have established a solid demand foundation, Gu added.

Supply inelasticity is another crucial element, said Xia Yingying, precious metal analyst at Nanhua Futures.

"Precious metal mining requires substantial investment and long development cycles, making quick production increases difficult," he noted. "Silver, primarily produced as a by-product, has even less supply flexibility than gold, making prices particularly sensitive to demand changes."

"Rising sovereign debt levels in the United States and other nations, coupled with recent concerns about the Fed's independence, have sparked fear of worsening deficits and further currency devaluation, driving investors toward precious metals," said Wu Zijie, precious metals researcher at JRJ Futures.

Xia urged caution, warning that high prices and significant volatility call for careful risk management and advising against chasing price hikes.

"While the medium- to long-term bullish predictions remain valid, short-term volatility risks have notably increased," Gu noted, recommending investors to maintain light positions, use price corrections for gradual accumulation, and implement strict risk controls while avoiding high-price entries.

Editor: Futura Costaglione