UBS lifts its forecast for gold prices

Investing.com -- UBS has raised its gold price forecasts, anticipating further gains in the precious metal over the next year.

The bank now expects gold to reach $2,750 per ounce by the end of 2024, up from its previous forecast of $2,600.

By mid-2025, UBS projects prices to rise further to $2,850 per ounce, and to $2,900 per ounce by the third quarter of 2025.

This year, gold has surged by 29%, consistently breaking records, UBS noted.

On September 24, the metal hit an all-time high of $2,670 per ounce, driven by concerns over economic growth, geopolitical tensions, and a weakening U.S. dollar. It has broken that level today.

UBS pointed out that historically, gold tends to rally by up to 10% in the six months following the first Federal Reserve rate cut, and the metal's current upward momentum suggests even more gains are likely.

“We see even higher prices over the next 6-12 months, driven by greater investment demand alongside a drop in U.S. real rates, a seasonal recovery in jewelry consumption, and ongoing central bank purchases,” UBS analysts stated.

The bank also mentioned that despite the rapid rise in prices, pullbacks this year have been “shallow and brief,” forcing investors to chase the market higher.

With the U.S. election approaching, UBS sees increased uncertainty, which could further fuel demand for gold as a safe haven asset.

Additionally, the bank observed that while Swiss gold export data indicates slower demand from China, this is likely due to quota limitations rather than a drop in underlying demand.

UBS continues to recommend a 5% allocation to gold within a balanced USD portfolio, citing the metal's hedging qualities. It also expressed a positive view on select gold miners as a tactical investment opportunity.

Source: Investing.com