Gold prices are expected to rise to $2,900 per ounce by the end of 2025, according to UBS. Currently, gold prices are stable at around $2,650 per ounce due to a strong US dollar and rising Treasury yields.

However, gold has outperformed the S&P 500 index since the beginning of 2024, with a 28% surge driven by central banks' ongoing accumulation of gold as part of diversification strategies. Recent data from the International Monetary Fund shows that global central banks made their largest gold purchases of the year in October. UBS estimates that 982 metric tons of gold will be acquired in 2024, significantly higher than the post-2011 average of 500 metric tons.

Investor demand for gold is also increasing due to uncertainties surrounding U.S. fiscal and geopolitical policies, as well as ongoing global conflicts. This has led to increased inflows into gold exchange-traded funds. Furthermore, the Federal Reserve's recent interest rate cut is expected to weaken the dollar and boost gold demand, making it more attractive for non-dollar investors. UBS recommends a 5% allocation to gold within a USD-based balanced portfolio for diversification.