UBS Analysts Bullish on Gold as a Hedge Against Uncertainties
UBS analysts have reaffirmed their bullish stance on gold, citing its value as a hedge against rising macroeconomic and geopolitical uncertainties. Gold has surged by 23% this year, reaching all-time high spot prices due to factors like expectations of lower US yields and the trend of USD diversification by central banks.
UBS advises investors to consider allocating around 5% to gold within a balanced USD portfolio, as gold has historically outperformed equities during periods of elevated volatility. Despite reduced expectations for larger Federal Reserve rate cuts, gold remains strong with support from the European Central Bank’s rate cuts.
The bank’s mid-2025 target for gold is USD 2,700/oz, supported by increasing demand from gold ETFs. In August, physically-backed gold ETFs saw their fourth consecutive month of inflows driven by increased safe-haven demand and cooling US labor markets.
UBS highlighted strong inflows in North America and positive trends in Asia, particularly India, due to favorable tax and budget changes. As the “Most Preferred on gold” in its global asset allocation strategy, UBS concludes that gold remains an essential part of a diversified investment strategy, especially in times of uncertainty in the global economic landscape.
Analysis:
UBS analysts are optimistic about gold’s potential as a hedge against uncertainties, with the precious metal showing strong performance this year. They recommend allocating a portion of a balanced portfolio to gold, as it has historically outperformed equities during volatile times. The target price for gold by mid-2025 is USD 2,700/oz, supported by demand from gold ETFs. Inflows into gold ETFs have been driven by safe-haven demand and positive trends in North America and Asia. Overall, gold remains an important asset for investors looking to diversify their portfolios and navigate uncertain economic landscapes.