UBS analysts have expressed confidence in the ongoing rally of gold, projecting that the precious metal's upward trajectory is far from over.
UBS analysts have revised their price forecast for gold, predicting that it could reach approximately $2,800 by the end of 2024 and potentially climb to $3,000 by 2025. This positive outlook is supported by sustained demand across various market segments and a lack of significant selling pressure.
Several macroeconomic factors are expected to create a favorable environment for gold investments. Ongoing monetary easing by the US Federal Reserve and other central banks globally, along with declining interest rates, reduce the cost of holding gold and prompt investors to allocate more of their portfolios to this precious metal. Additionally, a weakening US dollar enhances gold's appeal as investors seek alternatives to traditional currencies.
Geopolitical tensions and the upcoming US elections contribute to the complexity of the market. Investors view gold as a safe haven asset amid economic instability, further driving its demand.
Despite a strong consensus favoring higher gold prices, market positioning remains relatively weak, indicating room for increased allocations to gold in the future. Central banks and official institutions are expected to continue bolstering their gold reserves to diversify amid risks associated with sanctions and geopolitical instability.
Consumer demand for physical gold, particularly in China and India, is projected to remain stable despite rising prices. This consistent demand from consumers supports the overall market for gold.
The interplay between central bank purchases and consumer demand will be crucial in shaping the future of gold prices. The broader economic landscape, characterized by low interest rates and a weakening dollar, is conducive to gold investment. As investors navigate a complex market environment, the allure of gold as a hedge against inflation and currency devaluation becomes more pronounced. The ongoing monetary policies adopted by central banks are likely to sustain favorable conditions for gold, encouraging institutional and retail investors to consider gold as a strategic asset. Rising geopolitical tensions further complicate the investment landscape, leading investors to gravitate towards gold as a safe haven.
In summary, the outlook for gold remains positive, driven by factors such as central bank policies, consumer demand, and geopolitical dynamics. UBS forecasts a significant rise in gold prices over the next few years, positioning the precious metal as a key asset in diversified investment portfolios.