Gold prices are poised to rally into next year amid bets on an easier monetary policy cycle, adding fuel to the precious metal’s record surge this year following a global tariff war, according to Swiss investment bank UBS.
Prices could reach US$3,500 per ounce by year end and US$3,600 by mid-2026, its Singapore-based strategist Joni Teves said on Wednesday. Geopolitical risks, tariff uncertainties and expected rate cuts by the Federal Reserve to fend off a recession 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 US$3,177.25 in recent trading, as risk appetite recovered following a temporary US-China 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 a typically quiet summer months for gold. 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 the Fed could 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.”
