SKN | UBS Sees Gold Supported Near $4,000 as Long-Term Forecast Reaches $5,400

Key Takeaways:

• UBS expects gold prices could retreat toward $4,000 per ounce in the near term as higher US real yields and a stronger dollar weigh on demand.
• The bank maintains a longer-term price forecast of $5,400 per ounce by September 2027, supported by central bank purchases, investment demand, and expectations of a weaker dollar.
• UBS forecasts annual central bank gold purchases of 750 to 1,000 metric tons, reinforcing its assessment of gold’s strategic role in reserve diversification.

UBS maintains a constructive long-term outlook for gold despite near-term pressure from rising US real yields and a firmer dollar. In its latest assessment, strategist Giovanni Staunovo indicated that prices could retreat toward $4,000 per ounce before recovering, while the bank retains a forecast of $5,400 by September 2027.

For wealth managers and institutional investors, UBS’s analysis highlights the distinction between short-term market positioning and the structural demand supporting gold. The bank’s outlook reflects its assessment of central bank reserve diversification, investment flows, and the potential direction of US monetary policy.

Why UBS Sees Near-Term Pressure on Gold

UBS identifies higher US real interest rates and dollar appreciation as the principal near-term headwinds. Because gold does not generate interest income, rising real yields increase the opportunity cost of holding the metal relative to interest-bearing assets.

Spot gold stood at approximately $4,191 per ounce on Friday at the time of the original report. Staunovo attributed recent price declines partly to non-commercial investors reducing their net long positions in gold futures and options.

However, the bank noted that holdings in gold-backed exchange-traded funds have remained relatively stable, with inflows continuing in recent weeks. This suggests that speculative positioning has weakened without a comparable deterioration in all segments of investment demand.

Central Bank Demand Supports UBS’s Longer-Term View

UBS considers central bank purchases a significant structural support for gold. Governments seeking to diversify reserves amid concerns about public debt, debt-servicing costs, and currency exposure have contributed to the metal’s demand profile.

Preliminary September figures cited in the report indicated that China purchased 23 metric tons of gold, while Uzbekistan acquired 7 metric tons. UBS maintains its forecast for annual central bank purchases of between 750 and 1,000 metric tons.

The bank also identifies continued Chinese demand, potential Indian festival-season purchases, and expectations of a weaker US dollar over time as supportive factors. It further observes that gold has demonstrated some resilience despite rising bond yields, potentially indicating a reduced sensitivity to real rates compared with previous market cycles.

Federal Reserve Expectations Remain Critical

Monetary policy represents another important variable in UBS’s forecast. Markets were pricing in slightly more than 75 basis points of Federal Reserve rate increases through 2027, whereas UBS expected one additional increase in 2026, followed by two 25-basis-point reductions during 2027.

If markets reassess the likelihood of further tightening, real yields could decline and provide support for gold. Conversely, persistently high real yields and a stronger dollar could prolong near-term weakness.

Looking ahead, investors should monitor central bank purchases, ETF flows, real yields, and changes in Federal Reserve expectations. UBS’s $5,400 forecast represents a research projection, not a guaranteed outcome. For a confidential discussion regarding gold exposure, portfolio diversification, and cross-border wealth preservation, contact our senior advisory team.