After previously cutting significant positions due to gold price declines triggered by the Middle East conflict, Union Bancaire Privée (UBP) has resumed buying gold, asserting that the long-term outlook for the precious metal remains solid. Since the outbreak of hostilities in the Middle East, gold prices have fallen sharply—contrary to its traditional role as a safe-haven asset that provides stability or appreciation during market turmoil, heightened uncertainty, or geopolitical tensions. Analysts suggest that inflation risks stemming from soaring energy prices are forcing markets to reassess central bank monetary policy trajectories. Investors now anticipate that major central banks, including the European Central Bank and the Bank of England, may lean toward interest rate hikes this year, a stark contrast to pre-war expectations of steady or lower rates. The prospect of higher rates directly pressures non-yielding assets like gold, making the U.S. dollar a more attractive safe-haven tool in the current environment. Additionally, during crises, investors rotate among assets, and stock market losses can trigger margin calls. Gold is one of the few assets that can be readily liquidated for cash without significant depreciation, which contributed to its sell-off during the recent Middle East conflict.
UBP is now gradually reintegrating gold into its discretionary client portfolios. After reducing its gold allocation from around 10% to 3%, the Swiss private bank is currently rebuilding its exposure. UBP plans to further increase its gold holdings, which primarily consist of physically backed exchange-traded funds (ETFs). The gold allocation has already risen to approximately 6% of its discretionary portfolio. Paras Gupta, Head of Discretionary Portfolio Management for Asia at UBP, noted in an interview that following the washout of “one-sided positions,” the bank has “taken the first step in rebuilding” its gold portfolio. He added that gold positions among both institutional and retail investors are now “fairly balanced.” As of last year, UBP managed client assets totaling about CHF 184.5 billion (approximately $233 billion).
Gupta stated that the bank maintains its year-end gold price target of $6,000 per ounce, citing persistent structural demand drivers such as central bank purchases, fiscal deficit concerns, and geopolitical tensions. Gold prices declined on Monday as U.S.-Iran negotiations yielded no results and the U.S. indicated plans to block the Strait of Hormuz. At the time of writing, spot gold was down 0.36% at $4,730.88 per ounce. Since the onset of the Middle East conflict, gold has fallen by roughly one-tenth as energy prices surged and investors focused on inflation risks. Gupta remarked, “Inflation risks are materializing faster,” adding that while this may pressure gold in the short term, macroeconomic forecasts do not point to a recession. Notably, bargain-hunting flows have recently emerged, helping gold recoup some of its losses. Data show that after recording the largest monthly outflow in five years during March, global holdings of gold-backed ETFs increased by about 20 tons in April.
Gupta pointed out that further buying “requires more clarity on how geopolitical events will evolve,” adding, “We haven’t seen that yet.” He noted that weekend developments “only reinforced the market’s need for greater clarity.” Despite short-term selling pressure, the underlying bull case for gold remains intact on Wall Street. UBP’s optimistic long-term outlook aligns with the views of several major financial institutions, including ANZ, Goldman Sachs, and Standard Chartered. These firms argue that although the current Middle East conflict has fueled sharp inflation and stoked “stagflation” fears—upending earlier rate-cut expectations—gold still has the potential to rebound strongly and reach new highs over the long term.
In a recent research note, ANZ analysts wrote that “a deteriorating mix of growth and inflation will largely pave the way for central banks to resume rate cuts.” ANZ maintains its forecast for gold to reach $5,800 per ounce by year-end. The analysts also highlighted that central bank gold buying is expected to remain a key support and bullish pillar for prices, with official sector purchases projected at around 850 tons by 2026. Goldman Sachs, in a March 31 report, noted that if negative supply disruptions in the Strait of Hormuz persist, gold still faces “short-term tactical downside risks.” However, the bank also suggested that prolonged geopolitical conflict could accelerate capital diversification away from traditional Western financial assets, thereby supporting gold over the long term. Goldman reaffirmed its $5,400 per ounce price target, citing ongoing central bank purchases and its expectation that the Federal Reserve will cut rates by 50 basis points this year.
J.P. Morgan maintains a bull case target of $6,300 per ounce by the end of 2026, while Wells Fargo Investment Institute raised its year-end target range to $6,100–$6,300. Both ranges are significantly above the all-time high of $5,594.82 set in January. State Street Investment Management, in a report earlier this month, kept its base case (50% probability) year-end gold price forecast at $4,750–$5,500, suggesting the gold bull market is only in its mid-cycle. The bank lowered the probability of a bull scenario reaching $5,500–$6,250 from 35% to 30% but noted that $4,000–$4,100 should provide strong support, with prices likely retesting record highs by 2027. Describing Q1 2026 gold market volatility as “pressured but not out,” the report indicated that oil price shocks may pose temporary headwinds but could reinforce structural tailwinds over the medium term.
Suki Cooper, Global Head of Commodity Research at Standard Chartered, observed that gold often serves as a source of liquidity in the early stages of a crisis, with historical suppression periods typically lasting 4–6 weeks. Although the recent decline has been more severe, overheated positions have largely been cleared, and gold’s safe-haven status remains intact. Cooper expects prices to challenge previous highs again, noting that structural drivers—such as concerns over high U.S. and global debt, fiat currency debasement, tariff and trade uncertainties, and geopolitical risks—remain firmly in place. She indicated that gold is currently pricing in multiple risks, making short-term moves nonlinear, and liquidity pressures may weigh on prices for some time. Still, she anticipates a resumed uptrend in the coming months. Importantly, gold’s 200-day moving average, unbroken since October 2023, offers strong technical support. Overall, the broader trajectory for gold remains upward.
In the view of veteran Wall Street gold bulls, the current price action resembles a “corrective bullish track”—where long-term bullish logic remains intact, and bulls are regaining pricing power after a deep short-term pullback. They emphasize that post-conflict currency depreciation, persistent inflation risks, and mounting fiscal deficits continue to serve as long-term structural tailwinds for gold.
Comments