Gold recently pierced the $4,250 per ounce level for the first time since June, moving decisively out of a trading range that had kept prices roughly between $4,000 and $4,100 per ounce. UBS strategists have reiterated a bullish medium-term forecast, maintaining their view that gold can reach $5,000 per ounce by the first half of 2027.
UBS attributes the latest leg higher to reported buying by Chinese institutional investors and inflows into gold exchange-traded funds. The bank also noted that recent coordinated efforts by the United States and Japan to stabilize the yen may have reduced the risk of a large sell-off in U.S. Treasuries, a development the strategists see as a secondary tailwind for the precious metal.
UBS on the outlook
“But while the immediate backdrop may remain volatile, the medium- to long-term case for gold still looks supported by several durable drivers,” UBS wrote. The strategists reiterated: “We expect gold prices to rise toward USD 5,000/oz in the first half of 2027.”
The bank sets out its bullish thesis on three structural pillars that it says underpin the path to its target.
1) Real yields and monetary policy
UBS expects real yields to decline as monetary policy eventually eases, lowering the opportunity cost of holding a non-yielding asset. As the bank put it, “Gold does not pay income, so higher real yields increase the opportunity cost of holding it.” UBS also anticipates that inflation will gradually moderate, allowing the Federal Reserve to hold interest rates steady this year before resuming easing in 2027. In this scenario, the expected Fed pivot would reduce the opportunity cost of gold and is likely to revive broader investment demand for the metal.
2) Dollar dynamics
The second pillar is a prospective weakening of the U.S. dollar. UBS points to what it describes as structural challenges - notably large U.S. fiscal and external deficits and already-elevated investor allocations to dollar assets - as creating room for renewed softness in the greenback over the medium term. “A weaker dollar has historically been a powerful tailwind for gold, while a renewed focus on diversification away from the U.S. dollar should benefit the precious metal,” the bank said.
3) Central bank buying
Finally, UBS highlights continued central bank demand as a durable price floor. The strategists wrote that “Central bank demand has remained an important pillar of support, even when private investment demand has been lackluster,” indicating that sovereign purchases have helped insulate the market during stretches of weak private-sector interest.
Near-term risks and caveats
UBS is explicit that the road to $5,000 will not be linear. The bank warned that “Near-term risks remain, especially if U.S. data stay firm, oil prices keep inflation concerns alive, or markets continue to price in a more hawkish Federal Reserve rate path.” Persistent inflation or a resilient U.S. economy could push back the expected Fed easing, keeping real yields elevated and exerting downward pressure on gold in the near term.
The bank’s $5,000 per ounce target implies roughly 18% upside from the recent break above $4,250/oz, a gap UBS considers achievable if the outlined structural drivers materialize over the medium term.
What this means for markets
UBS’s view links macroeconomic policy and currency dynamics to commodity price trajectories: lower real yields and a softer dollar would each tend to favor gold, while central bank buying provides a baseline of demand. However, the strategists’ caution about short-term volatility underscores how sensitivity to U.S. data, oil-driven inflationary pressure, and shifts in rate expectations could alter the timing and magnitude of any rally.
Note: This article reports on UBS strategists’ analysis and market developments as described by the bank. It reflects the bank’s stated expectations and identified risks without adding additional data or forecasts.