foto: Market Power
Bank strategists Dominic Schneider, Giovanni Staunovo, and Wayne Gordon noted in their review that gold has once again come under pressure: solid labor market data and rising real yields have caused markets to refocus on a possible rate hike this year.
According to Investing.com, this shift has hit gold—an asset that traditionally benefits from falling yields and central bank policy easing. UBS believes that prices may remain under pressure in the near term and gravitate toward the $3,850–4,000 per ounce range.
The market’s reaction to geopolitical risks was an additional disappointment for the “bulls”. Despite tensions between the U.S. and Iran, gold failed to demonstrate sustained growth. The bank notes that this prompted some investors to take profits and shifted attention back to key macroeconomic factors—dollar dynamics and real bond yields.
However, UBS is in no hurry to write off the metal. Although gold ETFs are seeing a moderate outflow of capital, investor positioning remains far from overheated levels. This preserves the potential for a return of demand.
Moreover, the bank maintains a positive outlook on gold over the next 12 months. UBS’s base case scenario assumes that the Federal Reserve will eventually begin cutting rates in 2027, when U.S. economic growth slows below its long-term trend.
According to analysts, central banks will continue to support the market. UBS expects global regulators to maintain annual gold purchases at 750–1,000 tons. In May alone, according to preliminary data, the People’s Bank of China purchased 10 tons of the metal, while the Central Bank of Uzbekistan acquired about 9 tons.
