Key insights
- UBS has lowered gold price forecasts due to stronger US economic data and a delayed Fed easing timeline, now expected in 2027. This outlook, coupled with higher real yields, puts near-term pressure on gold, with prices potentially falling to $3,850-4,000/oz. Despite this, UBS remains constructive long-term, anticipating Fed rate cuts in 2027 and potential US dollar weakness, suggesting current weakness may be a buying opportunity.
Investing.com -- UBS has lowered its gold price forecasts by $300-900/oz, citing a "double whammy" of stronger US economic data and a delayed Fed easing timeline now pushed to 2027.
Strategists Dominic Schnider, Giovanni Staunovo, and Wayne Gordon said in a note that gold has faced renewed pressure as resilient labor market data and higher real yields prompted markets to shift expectations toward a possible rate hike this year.
UBS noted that momentum indicators suggest prices "may continue to gravitate toward the USD 3,850-4,000/oz range in the near term."
The bank noted that the metal's "muted response to the escalation between the US and Iran has encouraged some profit-taking," leaving prices more exposed to traditional macro drivers like real yields and the dollar.
ETF holdings have recorded modest outflows, though UBS said positioning "remains far from extreme and leaves scope for renewed investor participation."
Despite the near-term cuts, UBS remains "constructive on gold over the next 12 months," with its base case assuming the Fed cuts rates by up to 50bps in 2027 alongside below-trend US growth.
The bank also sees "scope for renewed US dollar weakness" given large fiscal and external deficits.
Central bank demand remains a key pillar, with UBS expecting annual buying to stay within the 750-1,000 metric ton range. Preliminary May data showed the People's Bank of China adding 10 metric tons and Uzbekistan's central bank purchasing nearly 9 metric tons.
UBS concluded that weakness toward $3,850-4,000/oz "may ultimately prove to be opportunities to build exposure rather than reasons to abandon it."
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