Earlier this month, Citi raised its gold forecast. Another big bank, UBS, has now followed suit.
The Swiss investment bank nudged its Q1 2026 forecast gold price by $100 to $3,600 an ounce. This would mean new record highs over the next six months or so.
Gold hit a record high of $3,500 in April. The yellow metal has since consolidated and has generally traded sideways in the $3,300 range over the last few months.
UBS also raised its Q2 2026 gold forecast by $200 to $3,700 and added a third quarter ’26 target at the same level.
UBS analysts cited several factors influencing their bullish outlook, including U.S. macroeconomic risk, de-dollarization, central bank gold buying, and strong investment demand.
“Despite the dialing back of some trade frictions, we see U.S. macro-related risks, questions over Fed independence, worries about fiscal sustainability, and geopolitics underpinning de-dollarization trends and more central bank buying. In our view, these factors will drive gold prices even higher.”
UBS analysts anticipate a stagflationary environment with “below trend” economic growth and sticky price inflation. Despite the inflation issue, they expect the Federal Reserve to cut interest rates. The analysts said this combination of factors will lead to lower real interest rates, making gold a more attractive option.
UBS analysts are extremely bullish on gold investment demand, especially in the form of ETFs.
Gold inflows into ETFs through the first half of 2025 hit levels not seen since the pandemic, and that trend continued through July.
UBS raised its 2025 ETF demand forecast from 450 to nearly 600 tonnes.
ETFs are a convenient way for investors to play the gold market, but owning ETF shares is not the same as holding physical gold.
Meanwhile, UBS analysts expect central bank buying to continue to support the gold market.
“Central bank purchases should stay strong, albeit slightly below last year’s near-record purchases. We, therefore, now forecast global gold demand to increase by 3 percent to 4,760 tonnes in 2025, which would mark the highest level since 2011.”
As for tariffs, UBS analysts expect rates to settle around 15 percent as more countries enter into trade agreements with the U.S., reducing some of the uncertainty surrounding trade.
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