Gold has lost a bit of shine in recent weeks but Swiss bank UBS still sees plenty of upside in the metal and has upped its targets for the current year and 2025.
“Gold has rallied as much as 36% from trough to peak this year and is up by a net 28% so far,” UBS noted.
“With prices holding well above $2600, even after the latest strong US employment print, it can be difficult to recall that gold was trading below $2000 less than 12 months ago.”
UBS expects the price to rally to US$2,800 by the end of this year and hit US $3000 in 2025 as broad buying continues with few sellers.
“Now that the Fed’s easing cycle is underway, we expect investors to start increasing gold positions as the cost of carry continues to decline.
“A bearish US dollar trend also acts as a tailwind for gold, especially as the yellow metal provides an alternative to other currency crosses."
Fundamental demand should continue to offer support, though risks are rising, added UBS, though it still expects central banks and other official institutions to continue adding to gold reserves.
Even with the price at near record levels, interest in gold as an alternative investment in markets such as China as well as growing incomes and lower import duties in India should help underpin physical demand.
Other precious metals are less attractive to UBS, with silver and platinum group (PGM) forecasts revised lower on mark-to-market changes.