UBS Global Precious Metals Comment: Is the Gold Rally Over?
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UBS argues that the gold rally is not over, characterizing the recent 21% pullback as a healthy consolidation that allows investors to establish strategic positions at attractive levels. Support is projected near $4,500 per ounce. The fundamental bullish narrative remains intact, driven by portfolio diversification needs, central bank purchases, and robust retail and institutional demand expected to push prices to new highs in the coming quarters.
Short-term speculative positions have been cleaned out, creating breathing room, while long-term allocations remain low. UBS expects physical buyers to step in after volatility is absorbed. A weaker dollar continues to support gold, with ETF inflows persisting, particularly in the US and China. Although jewelry demand is soft, strong Chinese investment demand offsets this weakness.
UBS maintains its 2026 average gold price forecast at $4,675 per ounce and its year-end target at $5,200 per ounce. Bull and bear scenarios are set at $5,750 and $3,900, respectively. For 2027, the average price forecast stands at $4,275 per ounce. The primary downside risk involves robust economic growth and a Federal Reserve policy shift that could trigger higher real rates and a stronger dollar, though a 2013-style taper tantrum is deemed unlikely.