Gold to Hit New Record This Year on Market Uncertainty, UBS Says
Gold’s biggest annual gain since 2010 will be followed by fresh record highs later this year as trade and geopolitical uncertainties help drive demand for the haven asset, UBS Group AG predicts.
The metal has edged higher this month — trading near $2,670 an ounce — after jumping 27% in 2024. While a stronger dollar and elevated US yields will be headwinds in the first half of this year, that will be more than offset by demand for bullion as a diversifier, pushing prices to $2,850 by year-end, UBS said.
The bank pointed to the unpredictable nature of Donald Trump’s administration and said there should be strong demand for the metal from central banks and investors. It also said bouts of equity market volatility should become more frequent.
“We expect gold’s track record as a diversifier to be even more relevant to investors in 2025,” UBS analysts including Wayne Gordon and Giovanni Staunovo wrote in a report. “In other words, 2025 could be simply more of the same.”
Gold advanced on Tuesday after the latest data on US wholesale inflation eased concerns about lingering price pressures. Policymakers have said they’d adopt a more measured approach to lowering borrowing costs this year as they want to see more progress in easing inflation. Higher borrowing costs tend to make bullion less attractive, as it doesn’t pay interest.
Traders will eye more economic data later this week, which should provide more clues on the Fed’s rate trajectory. Underlying US inflation probably cooled by only a touch at the close of 2024, according to a Bloomberg survey, which would add support for the central bank’s go-slow approach to cuts.
Still gold has been supported as investors seek refuge ahead of the uncertainty of a second Trump term that starts on Jan. 20, helping it shrug off pressures of a stronger dollar and rising bond yields. Members of the president-elect’s economic team are discussing slowly ramping up tariffs month by month, according to people familiar with the matter.
UBS also sees silver rising this year, forecasting a price of $38 an ounce by year-end, partly on the back of stronger manufacturing demand.
Spot gold rose 0.3% to $2,671.75 an ounce as of 10:57 a.m. in New York. The Bloomberg Dollar Spot Index fell 0.4%. Silver edged higher to $29.89, while platinum and palladium fell.
Source : Bloomberg
