Zurich: UBS Investment Bank has expressed optimism about the ongoing rally in gold prices, projecting that the upward trend will likely persist until the second or third quarter of next year amid prevailing global uncertainties.
According to BERNAMA News Agency, UBS's precious metals strategist, Joni Teves, indicated that despite the volatility in various asset classes due to recent tariff announcements, the overall outlook for gold remains unchanged. Teves highlighted that potential downside risks to economic growth could prompt the United States Federal Reserve to continue easing its policy, which would create a favorable environment for gold.
Teves advised investors to diversify their assets by including gold, which she identified as a reliable safe-haven asset. She noted that long-term themes such as asset reallocation and de-dollarization support gold's appeal. During a virtual interview, Teves mentioned that despite gold's rally, there is still room for investors to increase their holdings, as net long positions in Comex gold futures were relatively low at the start of 2025.
The strategist attributed this to previous pressures on gold when the Fed was raising interest rates, leading to reduced gold positions. Teves suggested that the market might consolidate in the short term, providing investment opportunities for those currently hesitant.
Teves pointed out that physical gold investment has increased across different regions in the first quarter of 2025, and she expects this trend to continue throughout the year. UBS forecasts that gold prices could reach $3,500 per ounce by the end of this year and next year, though the rally might ease from mid to late next year.
Comparing gold to cryptocurrencies, Teves emphasized that gold would remain the preferred safe haven amidst geopolitical risks, unlike cryptocurrencies, which are considered risk assets. She projected that the macroeconomic environment would continue to support gold's rally into the next year, with demand coming from various market segments, including the official sector, private wealth, asset managers, funds, and retail investors.
Teves also noted that while high gold prices might pressure jewelry demand, physical investment demand is expected to mitigate some of these weaknesses. She identified China as a potential upside risk due to strong bullish sentiment and significant trading volumes. Conversely, a more stable tariff environment and a hawkish shift by the Fed could pose downside risks to gold.