Key Takeaways:
UBS expects gold to rebound from current levels to $4,675 an ounce by end 2026, with improving sentiment supporting the medium-term outlook.
Gold held near $4,130 an ounce in Asian trading Thursday, as traders weighed UBS's bullish year-end forecast against near-term pressure from elevated bond yields.
"We believe sentiment towards gold is starting to improve and continue to expect prices to rebound from current levels by year-end," Joni Teves, gold strategist at UBS, said.
UBS forecasts gold at $4,675 an ounce by end 2026 and $4,800 an ounce by end 2027. Hong Kong and China gold equities have gained around 20% in three days, a sign of improving sentiment, Teves noted. Spot gold was flat at $4,133.08 an ounce as of early Asian trade, after touching a two-week high of $4,165.87 in the prior session.
The next catalysts are the Federal Reserve's July 30-31 policy meeting and further developments in the Middle East, where rising oil prices have fueled inflation concerns. A higher interest-rate environment typically drags on non-yielding assets like gold, with traders pricing a 77% chance of a rate hike by September, according to CME FedWatch data.
A modest dollar pullback has supported gold this week, but the broader outlook remains constrained by elevated bond yields across major economies, said Tony Sage of Critical Metals in commentary. The European Central Bank's rate decision Thursday, followed by the Fed, Bank of Japan and Bank of England next week, will shape the near-term trajectory.
Rising oil prices amid escalating Middle East tensions have reinforced hawkish monetary policy expectations, capping gold's upside. WTI crude rose to its highest in more than six weeks after the United States launched new strikes on Iran and Yemen's Houthis targeted oil tankers in the Red Sea.
Among other precious metals, silver added 0.3% to $59.90 an ounce, platinum gained 0.7% to $1,656.24, and palladium rose 0.8% to $1,301.25.
This article is for informational purposes only and does not constitute investment advice.
