UBS: Gold Rally Remains Supported by Multiple Factors, Target Price Set at $5,200 per Ounce by End of June Next Year

Source: Shanghai Securities News · China Securities Journal

According to Shanghai Securities News, the UBS Wealth Management Chief Investment Office (CIO) recently expressed its institutional view that the rally in gold remains supported by multiple factors. By the first half of 2027, gold prices are expected to rise to $5,000 per ounce, with a target price of $5,200 per ounce by the end of June. If gold prices fall below $4,000 per ounce in the short term, investors may consider this as a potential window for strategic allocation to gold.

Gold prices surpassed $4,300 per ounce for the first time since June, breaking out of the previous $4,000 per ounce

In the short term, UBS believes that if US economic data remain strong, inflation concerns triggered by oil prices intensify, or the market further raises expectations for the Federal Reserve’s interest rate path, gold may still face volatility risks.

Nevertheless, despite the short-term market environment remaining relatively turbulent, the medium- and long-term logic supporting gold has not changed. UBS points to factors such as a possible decline in real interest rates, a weakening US dollar, sustained demand for diversification of reserve assets, and continued strong demand for gold from global central banks.

A decline in real interest rates is expected to drive renewed investment demand. Gold is a non-interest-bearing asset, so rising real interest rates increase the opportunity cost of holding it. UBS expects that as inflation gradually recedes, the Federal Reserve may keep rates unchanged this year and could restart a monetary easing cycle in 2027. Lower policy rate expectations typically depress real yields and weaken the US dollar, thereby supporting investment demand for gold.

A weakening US dollar and de-dollarization capital inflows will continue to be important medium-term supports. UBS further states that

In addition, continued buying by global central banks provides a solid bottom support for the gold market. Even if private investment demand is relatively subdued, central bank purchases remain a major supporting force for gold. UBS expects that under the long-term trend of de-dollarization, global central bank demand for gold will stay at high levels. After buying 289 metric tons of gold in the second quarter, UBS still expects global central bank gold purchases to be between 750 and 1,000 metric tons for the full year. While this demand may not alone push gold prices sharply higher, it helps stabilize the market and offset negative factors such as weak jewelry demand.

Therefore, UBS believes investors should distinguish between short-term trading risks and long-term allocation logic. From a strategic allocation perspective, if gold prices fall to $4,000 per ounce or below, this may offer an attractive entry opportunity. For investors who prefer physical assets, a mid-single-digit percentage allocation to gold in a well-diversified portfolio can be considered; at the same time, allocating to broad commodities can further enhance portfolio diversification.

Editor: Zhu Hanan