UBS Analysts Bullish on Gold as Hedge Against Uncertainties | Investing.com
UBS analysts have reaffirmed their bullish stance on gold, citing its value as a hedge against rising macroeconomic and geopolitical uncertainties. Gold has surged by 23% this year, reaching all-time high spot prices. Factors such as expectations of lower US yields and USD diversification by central banks have contributed to this rise.
Investors are advised to consider allocating around 5% to gold within a balanced USD portfolio. Gold has historically outperformed equities during periods of elevated volatility, a trend that has been evident in recent months. Despite reduced expectations for larger Federal Reserve rate cuts, gold remains strong with support from the European Central Bank’s rate cuts.
UBS maintains a mid-2025 target of USD 2,700/oz for gold, supported by increasing demand from gold ETFs. Physically-backed gold ETFs saw their fourth consecutive month of inflows in August, driven by increased safe-haven demand and cooling US labor markets.
North America has seen strong inflows into gold ETFs, while Asia, especially India, has experienced positive trends due to favorable tax and budget changes. UBS remains "Most Preferred on gold" in its global asset allocation strategy, emphasizing gold's hedging properties as essential in a diversified investment strategy amidst continued uncertainty in the global economic landscape.
Analysis:
UBS analysts are optimistic about the future of gold as an investment, highlighting its role as a hedge against uncertainties. The recent surge in gold prices and the ongoing trend of central banks diversifying into gold support this outlook. Investors are advised to allocate a portion of their portfolio to gold for added stability. With gold outperforming equities during volatile periods and strong demand from ETFs, the future looks bright for gold investors. Consider adding gold to your investment strategy for long-term growth and protection against market fluctuations.