UBS says gold may retest support near $4,000 an ounce as high U.S. real yields and a firmer dollar weigh on the metal, but expects structural dip buyers to step in at that level. The bank keeps a longer-term price target path, forecasting $4,600 by December and $5,400 by September 2027.
Gold may retest support around $4,000 an ounce in the near term, UBS says, where the bank expects structural dip buyers to establish a floor. Rising real yields and a stronger dollar increase the opportunity cost of holding the metal, a non-yielding asset.
According to Investing.com, UBS strategist Giovanni Staunovo said in a note: "High U.S. real yields and a firm dollar could push gold back toward $4,000/oz". Spot gold traded at $4,191 on Friday at the time of writing.
Positioning drives the pullback
The decline in prices appears driven by non-commercial accounts that have reduced net long positions in futures and options, Staunovo said. ETF holdings, however, have stayed unusually resilient, with steady inflows in recent weeks.
Gold has also proved notably resilient to the sharp rise in yields, the strategist argues, suggesting its sensitivity to real rates has weakened as structural demand offers a stronger offset than in earlier cycles. He cited central bank diversification, concerns about public debt and debt-servicing costs, an expected weaker dollar over time, and robust Chinese buying. India demand should benefit from the festival season and lower prices.
Central banks keep buying
Central bank purchases kept a solid pace in September, based on preliminary data, led by China at 23 metric tons and Uzbekistan at 7 tons. UBS continues to expect annual central bank purchases of 750 to 1,000 tons.
The market is pricing in a little more than 75 basis points of Fed hikes through 2027, while UBS expects one more hike this year and two 25 basis point cuts in 2027. As markets reassess the scope for further tightening, lower real yields should lead to higher gold prices, Staunovo said.
UBS holds a longer-term price target path
Looking ahead, UBS forecasts gold at $4,600 by December, $5,000 by March 2027, $5,200 by June and $5,400 by September 2027. Staunovo said pullbacks toward $4,000 offer opportunities to add exposure, and recommends a mid-single-digit gold allocation for investors who like real assets.
Source: Investing.com
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