UBS Raises Gold Price Forecasts, Predicting Further Gains in Precious Metal
In a recent update, UBS has raised its gold price forecasts, expecting significant gains in the precious metal over the next year. The bank now predicts 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.
Gold has seen a remarkable surge this year, with a 29% increase and breaking records consistently, according to UBS. 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. The price has surpassed that level today.
Historically, gold tends to rally by up to 10% in the six months following the first Federal Reserve rate cut. UBS analysts believe that the current upward momentum suggests even more gains are likely. Factors such as greater investment demand, a drop in U.S. real rates, a seasonal recovery in jewelry consumption, and ongoing central bank purchases are expected to drive prices higher in the next 6-12 months.
Despite rapid price increases, UBS notes that pullbacks this year have been shallow and brief, prompting investors to chase the market higher. With the U.S. election approaching, increased uncertainty could further boost demand for gold as a safe haven asset.
While Swiss gold export data shows slower demand from China, UBS attributes this to quota limitations rather than a decrease in underlying demand. The bank continues to recommend a 5% allocation to gold within a balanced USD portfolio, highlighting the metal's hedging qualities. UBS also sees potential in select gold miners as a tactical investment opportunity.
In conclusion, UBS's bullish outlook on gold prices indicates a positive trend for investors looking to diversify their portfolios and protect against market uncertainties. The projected price increases, driven by various factors, suggest that now may be a favorable time to consider adding gold to your investment strategy.