UBS sees gold extending positive aspects into 2025, forecasts $2,900/ouncesvalue goal

Gold costs held regular this week at round $2,650/oz, weighed by latest US greenback energy, rising Treasury yields, and bettering investor sentiment towards US equities. Since hitting an all-time excessive on the finish of October, the metallic has retreated four.7%. Nevertheless, UBS stays bullish on gold’s outlook, highlighting its robust efficiency—up practically 29% year-to-date—which has outpaced the S&P 500.

UBS expects gold to construct on these positive aspects, forecasting costs to achieve $2,900/ouncesby the top of 2025, supported by a mixture of central financial institution demand, rising investor curiosity, and a decrease price surroundings.

Central Banks to Drive Continued BuyingGlobal central banks stay a major driver of gold demand as they diversify reserves amid broader de-dollarization traits. UBS notes that October’s internet gold purchases, as reported by the Worldwide Financial Fund, reached their highest month-to-month degree of the 12 months. UBS revised its 2024 estimate for central financial institution gold purchases to 982 metric tons—up from 900mt—citing underreporting traits in official information. Whereas nonetheless beneath the highs of the previous two years, this determine is a pointy improve from the 500mt common seen yearly since 2011.

Trying forward, UBS expects central banks to keep up robust shopping for momentum, projecting purchases of 900mt or extra in 2025 as reserve diversification efforts proceed.

Gold as a Key Hedge in an Unsure ClimateInvestor demand for gold as a portfolio hedge is anticipated to rise amid ongoing geopolitical dangers and coverage uncertainty. UBS flags lingering issues across the Russia-Ukraine battle, tensions within the Center East, and uncertainty surrounding US fiscal and commerce coverage below President-elect Donald Trump’s administration. These dangers, coupled with Trump’s transactional coverage method, might improve inflows into gold-backed exchange-traded funds (ETFs) as buyers search safe-haven property.

Decrease Charges and a Weaker Greenback to Bolster GoldUBS sees additional tailwinds for gold stemming from decrease rates of interest. The Federal Reserve is anticipated to proceed easing financial coverage with a 25 foundation level price lower on Wednesday (US time), with extra cuts anticipated within the 12 months forward. Decrease charges cut back the chance price of holding gold, which doesn’t generate curiosity.

Moreover, UBS expects the US greenback to weaken over the medium time period as a consequence of decrease charges and rising issues concerning the US authorities’s debt trajectory. As gold is priced in US , a weaker greenback makes the metallic extra inexpensive for worldwide buyers, additional boosting demand.

Past gold

Past gold, UBS additionally highlights alternatives in copper and different transition metals, citing rising world funding in energy era, vitality storage, and electrical transport as long-term demand drivers.

This text was written by Aaron Cutchburt at www.ubaidahsan.com.



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