UBS expects gold prices to rise to between $5,900 and $6,200 per ounce by 2026, driven by a combination of financial and geopolitical factors that are boosting demand for the metal as a store of value. UBS's Global Wealth Management division explained that this projected increase reflects rising financial risks in the United States, as well as geopolitical tensions and structural shifts in the global monetary system.
UBS noted that gold's performance during military conflicts has historically been mixed, meaning that wars alone are not enough to guarantee a sustained rise in gold prices. However, the bank believes that the current macroeconomic situation provides stronger support factors beyond the recent escalation in the Middle East, bolstering the likelihood of continued gains for the precious metal.
The bank highlighted concerns about the trajectory of US government debt and the gradual decline in confidence in Treasury assets, considering these factors a significant driver of continued demand for gold as a safe haven. These dynamics coincide with a long-term shift by central banks and investors toward diversifying their portfolios away from the US dollar, a phenomenon analysts have termed the dollar ditch.
UBS noted that this trend has emerged in recent years through record levels of central bank gold purchases and increased interest in non-dollar reserve assets, which could bolster gold prices in the near and medium term. The bank maintains a long-term buying position in the metal as part of its global asset allocation strategy, with a modest allocation of a mid-single-digit percentage.
UBS also emphasized gold's role as a hedge against inflation, geopolitical risks, and financial instability, as investors increasingly question the sustainability of global public debt levels and the resilience of traditional reserve assets. The bank explained that while the Iranian conflict could lead to short-term volatility, broader, more structural factors remain the primary driver of higher gold prices.
This forecast from UBS reflects that gold will continue to play a pivotal role in global investment portfolios, with gold prices emerging as a key element in investors' long-term hedging and storage strategies.
