Gold prices are poised to rally into next year thanks to bets on an easier monetary policy cycle, adding fuel to the precious metal’s record surge this year amid a global tariff war, according to Swiss investment bank UBS.
Prices could reach US$3,500 per ounce by the end of the year and US$3,600 by mid-2026, suggesting a 14 per cent upside from current levels, Singapore-based strategist Joni Teves said on Wednesday. Geopolitical risks, tariff uncertainties and expected rate cuts by the US Federal Reserve would be reasons to own more gold, she added.
Gold was an “attractive and preferred” haven asset to diversify into the long term, she said during an online media briefing. Fund reallocation and efforts by investors to trim their exposure to US dollar-based assets are supportive of calls for diversification, she added.
Gold has risen 21 per cent this year, hitting an all-time high of US$3,431.77 on May 6, according to Bloomberg data, adding to a 27 per cent advance in 2024. Prices retreated to a one-month low of about US$3,150 on Thursday, as risk appetite recovered following a US-China tentative tariff deal in Geneva earlier this week.
“With this recent tariff headline, the market is due for a period of consolidation,” Teves said, adding that prices could retreat to US$3,100 in the near term given that summer is generally quiet for gold traders. Still, the pullback provides an opportunity for investors waiting for better levels to get in, she said.
Gold’s appeal may be strengthened by bets on the Fed policy trajectory. There is a more than 50 per cent chance that the Fed will cut its key rate in September, October and December policy meetings, according to odds compiled by CME Group. Prices jumped 7.8 per cent when the Fed cut rates on September 18 last year until it paused on January 29.
“Our expectation is that the Fed continues to ease policy rates, given the downside risks to economic growth,” Teves said. “It is key to our bullish gold outlook.”
