Gold has outperformed all asset classes in 2025. Will the rally continue?

Gold has become the leader in terms of yield in 2025, ahead of stocks, bonds, G-10 currencies and bitcoin. But UBS predicts that the precious metal will rise in price by another 5% by the end of 2025, and by September 2026 - by 11%. According to the bank, even with the trade war weakening, there are still risks that will ensure the continuation of price growth. Goldman Sachs is even more bullish and compares gold not with other raw materials (for example, oil), but with real estate in Manhattan.

Since the beginning of 2025, spot gold prices have risen 28%, outperforming all other asset classes, including key equity and debt indices, leading currencies and even bitcoin, Seeking Alpha noted. But, according to UBS analysts, its growth potential is not exhausted here. The investment bank raised its forecasts for the precious metal's price: from $3500 to $3600 per troy ounce by March 2026, as well as from $3500 to $3700 - by the end of June and by the end of September of the same year, Seeking Alpha reports. The 2025 year-end target remains at $3500, up 5% from the close of trading on Aug. 18. The new June 2026 target implies another 11% increase from the last close.

UBS still considers gold an "attractive asset" and keeps long positions in its global portfolio, emphasizes Seeking Alpha. Even with the easing of trade wars, there are still serious risks: the slowdown in the U.S. economy, doubts about the independence of the Fed, budget sustainability issues and geopolitical tensions, UBS noted. All this, according to the bank, strengthens the trend of dedollarization and pushes central banks to buy the traditional protective asset - gold.

In addition, UBS also revised its forecast for annual gold demand from ETF funds upward to nearly 600 metric tons from the previously expected 450. The bank cited data from the World Gold Council that showed inflows in the first half of 2025 were the strongest since 2010.

"Purchases by central banks are likely to remain strong, although slightly below last year's near-record volumes. So we now forecast global gold demand to rise 3% to 4,760 tons in 2025, the highest since 2011. The key risk to gold is if the Fed does have to raise rates," UBS analysts added(quoted by Reuters).

Goldman Sachs expects spot gold prices to rise to $3700 an ounce by the end of 2025 and $4000 by mid-2026, implying upside potential of 11% and 20% from the last close, respectively, reports Business Insider.

The Bank believes that the value of gold is better compared to the price of luxury real estate in Manhattan than to other commodities, such as oil. The supply of gold, like high-end housing in Manhattan, is limited, and prices are determined not by new construction, but by those who are willing to pay. Moreover, unlike raw materials that are consumed, gold accumulates: almost the entire amount ever mined - about 220,000 tons - is still in circulation, mostly in reserves and jewelry. Annual mining adds only a little more than 1% to reserves.

"Gold cannot be "pumped" like oil - it just changes owners and gets a new price," Goldman Sachs analysts noted. According to them, this makes gold a unique commodity: the traditional laws of supply and demand do not apply here, and rising prices do not limit the interest of buyers.

On August 19, spot gold prices remained almost unchanged at $3330 per ounce. In April, prices for the precious metal soared to historic highs - up to $3500 per ounce - after Donald Trump announced duties for U.S. trading partners, as well as amid concerns about the independence of the Fed.

This article was AI-translated and verified by a human editor