Gold prices are on course to rise even further, analysts at UBS said, after yet another record high was reached on Tuesday.
Gold had climbed to a new high of US$2,642 on Tuesday morning, after breaking its own record twice on Monday, with the rise following the Fed’s 0.5% base interest cut last week.
Further easing of US base rates by the Federal Reserve, worsening geopolitical tensions and ongoing demand from central banks should keep driving gold higher, according to a note from the Swiss bank's chief investment office.
UBS said gold could climb as high as US$2,700 an ounce by mid-2025 as a result, with the factors having driven the metal to several records this week already.
“This is just the start of the Fed’s easing cycle,” UBS said, “as returns on cash are eroded by this lower interest rate environment, more investor funds may end up redirected into assets like gold”.
This would add to strong central bank demand for gold, which UBS said now accounted for roughly a quarter of buying ahead of the anticipated uptick from traders.
UBS also pointed to worsening tensions in the Middle East and between Ukraine and Russia, which have in turn fuelled demand for what is seen as a safe-haven investment.
Gold sat at $2,636 as of Tuesday afternoon, having climbed by 0.2% during the day and up from around $1,800 a year ago.