Gold Price Rally Expected to Continue, UBS Analysts Predict
The recent rally in gold prices is set to persist, driven by key market conditions and geopolitical uncertainties. UBS analysts foresee impending interest rate cuts, a weakening U.S. dollar, and persistent geopolitical risks as the primary catalysts for gold’s strong performance.
As central banks signal future interest rate cuts and adopt a more accommodative monetary policy, gold becomes more attractive to investors due to lower opportunity costs. The decline of the U.S. dollar also plays a crucial role in boosting gold prices, as a weaker dollar makes gold more affordable in other currencies.
Geopolitical uncertainties, such as conflicts in Ukraine and tensions in the Middle East, further enhance gold’s safe-haven appeal. UBS believes that these factors will fuel increased investment demand for gold, with inflows into gold-backed exchange-traded funds (ETFs) already on the rise.
Central bank purchases of gold, as part of a trend towards “de-dollarization,” are also expected to support higher gold prices. UBS forecasts a target price of $2,700 per ounce by mid-2025, driven by interest rate cuts, a weakening dollar, and ongoing geopolitical risks.
In conclusion, the outlook for gold remains positive as investors seek protection from market volatility and global economic uncertainties. Gold ETFs and central bank purchases are likely to drive further price increases, making gold an attractive option for investors looking to diversify their portfolios and hedge against risk.