UBS Expects Gold to Return to $4,000 as Dip-Buyers Build a Bottom
UBS strategist Giovanni Staunovo said gold could retest $4,000 as dip-buyers build a bottom, forecasting $4,600 by the end of 2026 and recommending a mid-single-digit allocation.
Giovanni Staunovo, a strategist at UBS, said that rising US real yields and a strong US dollar could push gold back down toward $4,000 per ounce, where the bank expects dip-buyers to build a bottom. The spot price of the metal was at $4,191 at the time the note was written.
The Swiss bank outlines an upward trajectory following this potential test, forecasting gold to reach $4,600 by the end of this December, followed by $5,000 in March 2027, $5,200 in June, and $5,400 in September 2027. Staunovo recommends a mid-single-digit percentage allocation of a portfolio to gold, viewing any pullback toward $4,000 as an opportunity to increase exposure rather than exit.
The bank bases its structural outlook on central bank purchases, with China leading purchases in September with approximately 23 tonnes, followed by Uzbekistan with seven tonnes. UBS expects annual official sector purchases to range between 750 and 1,000 tonnes. The bank attributed the recent decline to non-commercial accounts reducing their long positions in futures and options, noting that ETF holdings remained "more resilient than usual" as inflows continued.
On interest rates, markets are pricing in more than 75 basis points of hikes through 2027, while UBS foresees one additional hike this year and two quarter-point cuts in 2027. The bank adds to structural drivers central bank diversification, public debt concerns, expectations of a weaker dollar, and strong Chinese buying, while expecting Indian demand to improve with the festive season and lower prices.
What do these terms mean?
Real Yield: The bond yield after subtracting inflation, which is the metric investors use to compare the cost of holding non-yielding gold.
Price Target: The expected price of an asset over a specified period set by investment banks in their reports, which investors follow as an indicator of direction.
Reserve Diversification: Spreading a central bank's reserves across multiple assets and currencies to reduce reliance on a single asset such as the dollar or Treasury bonds.
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