SKN | UBS Sees Gold Recovery Potential as Treasury Yields Retreat and Rate-Hike Expectations Cool

Key Points

• UBS Group believes much of the recent bearish repricing in gold may already be reflected in prices. Gold has declined approximately 5% since early September to around US$4,140 per ounce, pressured by rising US Treasury yields and a stronger dollar.
• Historical episodes provide a potential recovery framework. UBS identified three previous periods when Treasury yields retreated from their peaks and gold subsequently advanced by approximately 5.9%, 11.4%, and 14.4%, respectively. These historical moves do not guarantee a similar outcome.
• Gold’s technical levels remain important to the outlook. UBS identifies US$3,990–US$4,030 per ounce as a key support zone, while a decisive move above US$4,280–US$4,320 would indicate improving upward momentum.

UBS Sees a Potential Turning Point for Gold

Gold has come under pressure as financial markets reassessed the outlook for US monetary policy. In a research report dated October 12, UBS Group attributed the metal’s approximately 5% decline since early September primarily to rising Treasury yields, persistent inflation concerns, and renewed expectations of further Federal Reserve rate increases.

During the period described in the report, the US 10-year Treasury yield climbed from approximately 4.8% to above 5.3%, while the US dollar index rose from around 100 to above 102. Gold declined from above US$4,400 per ounce to approximately US$4,140.

Higher Treasury yields can increase the opportunity cost of holding gold, which does not generate interest income. A stronger dollar can also make dollar-denominated gold more expensive for buyers using other currencies.

However, UBS argues that much of the recent hawkish repricing may already have been incorporated into gold prices. Signs of a softening US labor market and reduced expectations for additional rate increases could change the balance of forces affecting the metal.

Treasury Yields Could Determine the Next Direction

The central element of UBS’s outlook is the relationship between Treasury yields and gold prices. If economic data weaken sufficiently to reduce expectations for further monetary tightening, Treasury yields could retreat from recent highs, potentially improving gold’s relative appeal.

The bank also points to stabilizing oil prices as a factor that could influence inflation expectations. A combination of softer labor-market conditions and less persistent inflation pressure could reduce the perceived need for additional rate increases.

Nevertheless, the outlook remains conditional. If inflation proves more persistent than expected or economic data continue to support a restrictive monetary policy, Treasury yields and the dollar could remain elevated, extending pressure on gold.

For investors, the key distinction is between a change in market expectations and an actual change in Federal Reserve policy. Gold prices may respond to expectations before any formal policy adjustment occurs, but those expectations can also reverse as new data emerge.

Historical Recoveries Offer Context, Not Guarantees

UBS examined three previous periods in which US Treasury yields retreated from their peaks and gold subsequently recorded gains.

Following the October 2023 yield peak, gold advanced approximately 5.9% over 69 calendar days. After the April 2024 peak, the metal gained around 11.4% over 144 calendar days. Following the January 2025 peak, gold rose approximately 14.4% over 81 calendar days.

The catalysts differed across these episodes. The late-2023 recovery followed softer economic data and a reassessment of expectations for prolonged higher interest rates. The 2024 period featured a cooling labor market and increasing expectations for rate cuts, while the early-2025 advance was associated with slowing growth prospects and heightened policy uncertainty.

The common factor was a reassessment of how restrictive monetary policy would need to remain, accompanied by falling Treasury yields.

These examples provide historical context for UBS’s current thesis, but three episodes are not sufficient to establish a reliable forecast. Future gold performance will depend on the economic and market conditions that emerge.

US$4,000 Support and the Next Technical Thresholds

UBS identifies the US$3,990–US$4,030 per-ounce range as a key near-term support zone. A sustained break below this area would suggest that the correction could deepen.

On the upside, a decisive move above US$4,280–US$4,320 would signal an improvement in technical momentum and support the interpretation that the recent decline represents consolidation within a broader upward trend.

These levels provide reference points for monitoring price action, but technical thresholds cannot independently establish the direction of future prices. Their significance will depend on trading behavior and the accompanying macroeconomic environment.

Closing Insights

UBS’s assessment presents a conditional recovery case for gold, built around the possibility that Treasury yields have peaked and expectations for further Federal Reserve tightening are beginning to moderate.

The historical rebounds cited in the report support the rationale for watching changes in yields, labor-market data, and inflation expectations. However, they do not establish that gold will repeat those gains.

For investors, the key considerations are whether Treasury yields begin a sustained decline, whether the US dollar loses momentum, and whether gold holds its identified support zone. These factors will help determine whether the current correction stabilizes or develops into a deeper decline.

For a confidential discussion regarding retail banking strategy, insurance distribution models, customer loyalty ecosystems, digital financial services, or cross-border financial innovation opportunities, contact our senior advisory team.