Investing.com -- UBS analysts maintain a confident outlook for gold, stating that the rally in the precious metal is far from over.
In a note dated Wednesday, UBS has raised its gold price forecasts, predicting that prices will approach $2,800 by the end of 2024 and climb to $3,000 by 2025.
This upward revision reflects a continued broad-based demand for gold, driven by various market segments and a lack of significant selling pressure.
The bullish outlook is supported by several macroeconomic factors. As per UBS, the ongoing monetary easing, not only by the U.S. Federal Reserve but also by other central banks globally, will create an environment conducive to gold purchases.
As interest rates decline, the cost of holding gold decreases, encouraging investors to allocate more of their portfolios to the precious metal.
Additionally, a weakening U.S. dollar is expected to act as a tailwind for gold, as investors seek alternatives to traditional currency holdings.
Geopolitical tensions and the upcoming U.S. elections add further complexity to the market, with investors viewing gold as a safe-haven asset amidst rising fiscal deficits and ballooning government debt.
UBS analysts also note that while there is a strong consensus supporting higher gold prices, market positioning remains relatively lean, leaving room for further gold allocations in the coming quarters.
“We expect central banks and other official institutions to continue adding to gold reserves,” UBS said. Many central banks are diversifying their reserves due to sanctions risks and geopolitical instability, though the pace of gold purchases may slow.
Meanwhile, consumer demand for physical gold, particularly in major markets like China and India, is expected to remain steady despite higher prices.