Despite encountering resistance around $2,400 per ounce, the rally in the gold market is poised to persist, with a major Swiss bank raising its price forecasts across the board.
In a recent update to its gold market outlook, UBS commodity analysts predicted that gold prices will reach $2,500 per ounce by September and $2,600 by the end of the year. These figures represent an increase from the bank’s previous forecasts of $2,400 and $2,500, respectively.
Additionally, UBS has set a 12-month target, anticipating that gold prices will climb to $2,700 per ounce by June 2025.
The analysts identified three key factors supporting the upward trend in gold prices. The first is the Federal Reserve’s policy. Although the U.S. central bank has been hesitant to suggest a rate cut while inflation remains high, UBS believes that a decrease in interest rates is inevitable.
Lower interest rates are expected to reduce the opportunity cost of holding gold, likely attracting Western investors back to gold-backed exchange-traded funds (ETFs). According to the CME FedWatch Tool, markets currently predict that the Federal Reserve will maintain interest rates through the summer, with a 50/50 chance of a rate cut in September.
“While there is considerable uncertainty regarding the short-term path of rates, we anticipate a decline, which typically drives ETF inflows—our next key catalyst,” UBS analysts noted.
The second factor supporting higher gold prices is sustained demand from central banks. UBS expects central bank gold purchases to reach near-record levels this year, with global official reserves projected to grow between 950 and 1,000 tonnes. Data from the World Gold Council indicates that official gold reserves increased by over 1,000 tonnes in each of the past two years.
UBS also predicts that China will continue to play a significant role in the gold market. “Although recent data from the People’s Bank of China shows a slowdown in gold purchases, Swiss trade data indicates robust buying activity in China,” the analysts stated.
The third factor is geopolitical uncertainty, which is expected to drive safe-haven demand for gold. “We foresee ongoing geopolitical uncertainty bolstering hedges like gold, with the US election approaching, conflicts in the Middle East and Ukraine continuing, and heightened US-China trade tensions,” UBS analysts said.
UBS’s bullish outlook comes as gold has found solid initial support at $2,300 per ounce. The analysts recommend purchasing gold during dips in the current market environment.
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