Gold Price Forecast: UBS Expects Drastic Increase
The UBS has recently raised its forecast for the gold price, expecting it to rise to as much as 3,500 USD per ounce, with an upper scenario of 3,800 USD. This forecast reflects the growing uncertainty in global trade and geopolitical tensions, making gold a more attractive safe-haven investment.
Factors Influencing the Gold Price Forecast
1. Geopolitical Tensions and Trade Wars: The escalation of trade conflicts, particularly between the USA and China, has led to increased demand for gold as a safe investment. China has recently raised its tariffs on US products, putting pressure on global trade and increasing investors’ risk assessment.
2. Weakened US Dollar: A weaker US dollar increases the value of gold, as it is traded in US dollars. When the dollar weakens, the price of gold in dollars rises.
3. Central Banks and Institutional Investors: Central banks have massively purchased gold in recent years, increasing demand and stabilizing the price. UBS expects these purchases to continue into 2025 and could amount to about 1,000 tons.
4. Gold ETFs and Retail Demand: The demand for gold ETFs has rebounded strongly. UBS expects this demand to continue increasing in 2025 and could be around 450 tons.
5. Structural Changes: UBS sees a structural shift in the allocation of gold, as Chinese insurance funds are now allowed to invest in gold, which could increase demand for gold in the long term.
Outlook for Investors
For investors in the precious metals sector, it is important to consider these factors. UBS’s forecast suggests that gold could continue to increase in value due to its role as a safe investment and structural changes in the market. A portfolio diversification by allocating about 5% in gold is considered optimal to minimize risks and benefit from potential price increases.
In summary, UBS’s forecast of sharply rising gold prices is based on a combination of geopolitical risks, a weaker US economy, and structural changes in the gold market. These factors make gold an attractive investment option for investors looking to minimize risks.