UBS raised its gold forecast to $3800. What will ensure the growth of quotations by 4%?

Swiss bank UBS raised its gold price forecast to $3800 per ounce by the end of 2025. It expects lower Fed rates, a weaker dollar and increased demand for protective assets amid geopolitical instability. Portfolio diversification is crucial now, the bank says.

Investment bank UBS raised its gold price forecast to $3800 an ounce by the end of 2025 and to $3900 by mid-2026, citing expectations of new rate cuts by the Federal Reserve amid weak U.S. labor market data, Seeking Alpha writes.

At the time of publication of this text, the spot price of gold was about $3646. Thus, UBS forecast assumes growth of quotations by about 4.5%.

UBS also expects a weaker dollar and continued geopolitical uncertainty to support investor demand for gold as a protective asset.

"Diversification and having appropriate hedges in place is critical from a portfolio perspective," UBS analysts said, adding that U.S. President Donald Trump's push for lower interest rates is also boosting gold's appeal.

"We maintain a positive view on gold and continue to hold long positions [in gold] as part of our global asset allocation strategy. Moreover, our analysis shows that the optimal portfolio exposure to gold is at mid-single digits (around 4-6%)," UBS added.

The bank also raised its gold ETF volume forecast to about 3,900 metric tons by the end of 2025, close to a historical record, Investing.com writes. Inflows into the funds in 2026 are estimated at nearly 700 metric tons.

"Given the current correlation with prices, we raise our gold forecast by $200 an ounce by mid-2026," UBS strategists said in a note.

Since the beginning of the year, the metal has risen in price by 38%, having updated the record several times. Now the cost of gold is just below the historic high of $3674 per ounce, set earlier in September.

Gold does not yield interest, unlike bank deposits and bonds, so lower interest rates are usually a good factor for precious metal prices. Oninvest cited the advice of seven Wall Street experts on how best to invest in gold now.

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