UBS Maintains Bullish Outlook on Gold, Sees Price Reaching $4,675 Per Ounce This Year

Gold prices have stabilized and rebounded since the start of the week, driving shares of Hong Kong and mainland China gold-related companies up by approximately 20% over three days.

According to a report from UBS, investment sentiment in the gold market is gradually recovering. This improvement is primarily attributed to weaker-than-expected U.S. non-farm payroll data, softer inflation figures, and a continued decline in both CPI and PPI.

In contrast, for several preceding months, the market was constrained by rising oil prices due to Middle East geopolitical conflicts. This situation heightened inflation expectations and fueled investor concerns over a prolonged period of higher interest rates, which acted as the main headwind suppressing the gold price.

Notably, the gold price has recently been seesawing around the $4,000 per ounce level. It has tested this support zone multiple times, with buying interest consistently emerging on dips. Recent price action suggests this level may be establishing a solid support base.

UBS's global team remains positive on gold's medium-term prospects. The bank forecasts the gold price to rise to $4,675 per ounce in 2026 and further to $4,800 per ounce in 2027.

UBS gold strategist Joni Teves anticipates that the gold price has potential to move higher from current levels by the end of this year. In her view, portfolio diversification across a broader investor base remains a key driver of gold demand.

With macroeconomic uncertainty still elevated, she believes investors are seeking to build resilient portfolios that can withstand various potential outcomes. This helps explain why demand for gold remains robust, even as the opportunity cost of holding it remains high.

Furthermore, Joni Teves noted that the trend of central banks diversifying their reserve assets continues unabated. Official sector gold purchases are expected to continue providing a floor for gold prices.

Latest data indicates that during June, while gold prices consolidated around the $4,000 mark, the People's Bank of China took the opportunity to increase the pace of its gold purchases.