UBS Targets $5,400

UBS Raises Gold Price Target to $5,400

UBS has extended its gold price forecast by one quarter, setting a new target of $5,400 per ounce for the end of September 2027. The bank expects further upside for gold, supported by declining real interest rates, sustained investment demand, and a weaker US dollar.

The new forecast assumes that disinflation in 2027 will allow the US Federal Reserve to adopt a more accommodative monetary policy. UBS strategists also expect broad-based weakness in the US dollar. Meanwhile, the bank has maintained its end-2026 gold price target at $4,600 per ounce.

Gold prices have risen in recent sessions as investors reassess the outlook for US monetary policy and the direction of the dollar. Uncertainty surrounding the Federal Reserve’s near-term interest-rate path, combined with weaker US labor market data, has strengthened expectations that the Fed could keep interest rates unchanged if inflation remains under control.

Investment demand for gold has also improved. Gold ETF inflows have resumed, initially led by China and more recently by Europe, while central bank purchases remain strong. According to the World Gold Council, central banks recorded net gold purchases of 51 metric tons in June. The People’s Bank of China added another 20 metric tons to its reserves in July, marking its largest monthly increase since October 2023.

Three Key Drivers for Higher Gold Prices

UBS strategists identified three conditions that could allow the gold rally to continue: a sustained decline in the US dollar, lower expected US real interest rates, and stronger investor demand.

The bank’s base case assumes that the Federal Reserve will leave interest rates unchanged in September, although UBS highlighted uncertainty over the possibility of additional rate increases later this year.

On the demand side, UBS estimates that approximately 500 metric tons of investment demand per quarter could be required for gold to trade sustainably at or above the $5,000-per-ounce level.

Gold Outlook for 2027

The higher long-term forecast reflects UBS’s view that disinflation could become a more prominent theme in 2027. Favorable base effects and expectations that US economic activity will remain at or below trend could put additional pressure on the dollar and provide further support for gold prices.

With this outlook in mind and options volatility remaining above 20%, UBS strategists favor volatility-selling strategies, including selling downside gold price risk to generate additional returns.

UBS also sees potential buying opportunities if gold prices experience a correction. The bank said that a decline toward $4,000 per ounce could offer an opportunity to increase gold exposure.

Key Risk to the Gold Forecast

The main risk to UBS’s bullish gold outlook is another Federal Reserve rate hike this year. Higher interest rates could push real yields higher, strengthen the US dollar, and weaken investment demand for gold.

Under this bearish scenario, UBS estimates that gold prices could decline and potentially test the $3,850-per-ounce level.

Overall, UBS remains bullish on gold over the longer term, with its $5,400 target for September 2027 signaling confidence that lower real yields, weaker dollar conditions, and sustained investment demand could continue to support the precious metal.

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Gold Nears $4,450

Gold Rebounds Toward $4,450 Amid US Policy Uncertainty

Gold prices are rebounding toward $4,450 per ounce as uncertainty surrounding the US policy mix continues to increase, according to Bank of America (BofA). The precious metal is moving alongside EUR/USD as investors reassess monetary policy, fiscal sustainability, and exchange-rate management.

US-Japan intervention, viewed as a form of quantitative easing, has added to the trend. Growing questions over Treasury market support, the potential use of the Federal Reserve’s FIMA facility, and central bank independence highlight the increasingly complex relationship between interest rates, liquidity, and government finances. Gold typically benefits when policy signals become more difficult for markets to interpret.

Key US Economic Events Ahead

Several major events could influence gold prices in the coming weeks. Investors will closely monitor the US PCE inflation report on August 26, the Jackson Hole symposium from August 27-29, and the FOMC meeting on September 16. A more dovish Federal Reserve policy stance would likely provide further bullish support for gold.

Gold prices have averaged around $4,360 per ounce year-to-date, while investment demand has increased 7.3% year-over-year. Scrap supply and fabrication demand have proven less price-sensitive than previously expected. Gold holders remain reluctant to sell, while end-users continue to absorb higher prices.

Investment Demand Remains Crucial

BofA's model suggests that current investor purchases are more consistent with gold prices near $4,000 per ounce rather than $5,000, with the latter level associated with approximately 21% year-over-year growth in investment demand. Therefore, investment demand may need to accelerate significantly for gold to advance toward the $5,000 per ounce threshold.

Central bank purchases are already providing a supportive backdrop. Central banks bought 51 tons of gold in June, well above the 12-month average of 27 tons. However, sustained gains in gold prices are also likely to require a recovery in gold ETF inflows, which remain an important source of investment demand.

China Strengthens Its Gold Strategy

China's gold imports have reached a series of record highs this year, underscoring the country's growing strategic interest in the precious metal. China views gold as a potential tool for supporting the internationalization of the yuan.

By integrating the gold market more closely with RMB-denominated trade, clearing, and settlement, Beijing is gradually expanding alternatives to the dollar-centered financial system. HKPMCC represents an important step in this broader strategy.

Meanwhile, the World Gold Council's Gold247 initiative aims to make gold bullion easier to transfer, track, and use as collateral while maintaining a direct connection to physical gold. Such developments could further enhance gold's role within the global financial system.

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Gold Fed Outlook

 

Gold Pulls Back From Two-Month High as Traders Reassess Fed Outlook After Soft CPI

Gold prices edged lower on Thursday after retreating from a more than two-month high as investors weighed softer-than-expected inflation pressure against renewed concerns that higher energy prices could keep the Federal Reserve cautious about interest-rate policy.

At 13:54 WIB, XAU/USD fell 0.5% to $4,388.64 per troy ounce, while Gold Futures declined 0.5% to $4,446.12. Silver also weakened, with XAG/USD down 0.4% at $65.08 per troy ounce, while XPT/USD slipped 0.6% to $1,746.71.

Soft US CPI Eases Near-Term Fed Rate Concerns

Gold surged as much as 0.9% on Wednesday to around $4,450, its highest level in more than two months, before giving up part of the advance. Spot gold continued to retreat during early Thursday trading, falling around 0.5%.

The precious metal initially gained about 1% after US consumer prices rose just 0.1% in July from the previous month, in line with market expectations. The data suggested that energy-related price pressures linked to the Iran conflict have yet to generate a stronger inflationary impact.

The softer CPI reading reduced expectations for a near-term Federal Reserve rate hike. CME FedWatch showed that markets were pricing in roughly a 38%-40% probability of a September rate hike, down from about 46% before the CPI release.

The Federal Reserve kept its policy rate unchanged at 3.50%-3.75% at its July meeting, although three policymakers dissented in favor of a rate increase.

Markets are now turning their attention to the US Producer Price Index (PPI) report for another indication of inflation trends ahead of the Fed's next policy meeting.

Additional US employment and inflation data will be released before the September decision. Investors are also expected to closely monitor Fed Chair Kevin Warsh's comments at the Jackson Hole symposium later this month for clues about how policymakers are balancing inflation risks against economic growth.

Higher interest rates generally remain a headwind for gold because the precious metal does not generate interest income.

Hormuz Uncertainty Keeps Energy Risks in Focus

While softer inflation data reduced expectations for an immediate Fed rate hike, investors have already taken some profits following gold's initial bullish reaction.

Efforts to resolve the US-Iran conflict and reopen the Strait of Hormuz remain intermittent, while restrictions continue to affect the strategically important shipping route. Oil prices are heading toward weekly gains as traders monitor the latest attempts by Washington and Tehran to reach a resolution.

The US Dollar Index was largely unchanged near 99.96, providing limited fresh direction for gold. Lower US Treasury yields and a weaker dollar had previously supported the gold rally, although those moves have since moderated.

Gold continues to receive support from renewed demand after holding above the key psychological $4,000 level. Chinese demand has also remained an important source of support, with the People's Bank of China extending its gold-buying trend while investor appetite for the precious metal recovers following earlier selling pressure.

From a technical perspective, gold moved above its 100-day moving average for the first time since April this week, strengthening the broader bullish outlook.

Gold Market Outlook

Gold's recent pullback does not necessarily signal a reversal of the broader uptrend. Traders are likely to focus on upcoming US inflation and employment data, Fed policy expectations, Treasury yields, the US dollar, and developments surrounding the Strait of Hormuz.

If inflation remains contained and expectations for lower interest rates increase, gold could regain bullish momentum. However, persistent energy-price pressures and a more hawkish Federal Reserve stance could limit further gains in the near term.

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