UBS raises gold price target to $3,800/oz by end-2025

UBS has significantly raised its gold price forecast to $3,800 per ounce by end-2025 and $3,900 by mid-2026, citing anticipated Federal Reserve easing, U.S. dollar weakness, and geopolitical concerns. The bank maintains an "Attractive" view on gold, projecting ETF holdings to approach record levels and central bank purchases to remain robust, while noting the key risk is the Fed being forced to raise rates due to inflation surprises. Gold has already gained over 39% year-to-date, recently hitting a record $3,673.95.

Analysis

UBS has materially increased its gold price forecast, now projecting $3,800 per ounce by the end of 2025 and $3,900 by mid-2026. This bullish revision is underpinned by expectations of Federal Reserve monetary easing, resultant U.S. dollar weakness, and elevated geopolitical risk. The bank maintains an 'Attractive' view on the metal, recommending a mid-single-digit percentage allocation in global asset portfolios. Supporting this thesis, UBS anticipates gold ETF holdings will approach their record highs of 3,915 metric tons by late 2025, and that central bank purchases will remain robust at 900-950 tons this year. This outlook is presented against a backdrop of strong performance, with gold having already gained over 39% year-to-date and recently setting a record high of $3,673.95. However, UBS explicitly identifies a key risk to this forecast: the possibility of the Fed being compelled to raise interest rates in response to upside surprises in inflation.

Key Decisions for Investors

• Investors aligned with UBS's view on forthcoming Fed rate cuts and persistent geopolitical uncertainty should consider the bank's recommendation to maintain a long position in gold with a mid-single-digit percentage allocation.
• Closely monitor U.S. inflation data and Federal Reserve communications, as the primary identified risk to the bullish thesis is an unexpected hawkish policy shift to combat inflation, which would strengthen the dollar and increase the opportunity cost of holding non-yielding bullion.
• Given that gold has already appreciated over 39% year-to-date and is trading near record highs, it may be prudent to scale into new or additional positions rather than making a single large allocation, thereby managing entry-point risk amid strong upward momentum.