UBS has upgraded its outlook for gold after the metal surged to a record high, arguing that the rally is being supported by a mix of macroeconomic, institutional, and geopolitical drivers. The bank now expects gold to reach $2,500 per ounce by the end of September 2024, up from its prior forecast of $2,400. It also projects $2,600 by the end of 2024 and $2,700 by the end of June 2025.
UBS Reassesses Gold After Record Highs
The revised targets come after gold climbed to a fresh record of $2,450 per ounce on May 20. According to the UBS Chief Investment Office team, the move was driven largely by changing expectations around U.S. monetary policy and the dollar. Softer U.S. economic data led investors to increase bets that the Federal Reserve will cut interest rates, while a weaker U.S. dollar added further support to bullion prices.
For gold, the rate outlook matters because lower interest rates tend to reduce the opportunity cost of holding non-yielding assets. In that setting, investor appetite for gold often improves, especially through exchange-traded funds and other portfolio allocation vehicles. UBS said the recent price action reflects more than a short-term spike, pointing instead to a broader repricing of the macro environment.
Three Core Drivers Behind the Upgrade
UBS identified three main reasons for raising its gold forecast. The first is the shift in expectations for Federal Reserve easing. After weaker U.S. data in April, money markets began pricing in a larger amount of rate cuts for 2024. UBS noted that markets are now expecting about 40 basis points of easing this year, compared with 28 basis points at the end of April. If that repricing continues, it could provide additional support for gold through stronger investment demand.
The second driver is central bank buying. UBS increased its estimate for 2024 central bank gold demand to 950–1,000 metric tons, up from its earlier forecast of 800–850 metric tons. The bank highlighted that the first quarter alone saw a record 290 metric tons of purchases. While buying by the People’s Bank of China has recently slowed, UBS pointed to Swiss trade data as evidence that Chinese demand remains robust overall.
This central bank demand is especially important because it provides a structural base of support that can be less sensitive to short-term market volatility. In other words, even if speculative flows fluctuate, official sector accumulation can continue to underpin prices over a longer horizon.
Geopolitical Tensions Keep Gold’s Safe-Haven Appeal Intact
The third factor cited by UBS is continued geopolitical uncertainty. The bank said risks tied to the U.S. election, conflicts in the Middle East and Ukraine, and rising U.S.-China trade tensions are likely to preserve gold’s appeal as a defensive asset. In periods of heightened political or military uncertainty, investors often turn to gold as a store of value, particularly when confidence in broader markets becomes less stable.
That safe-haven bid has become a recurring theme in the gold market over the past several years. UBS’s latest forecast suggests that the bank does not expect those concerns to fade quickly. Instead, it sees them combining with monetary easing expectations and central bank accumulation to keep gold well supported into 2025.
Why the Forecast Matters
The UBS revision is notable because it ties together short-term market signals and longer-term structural themes. On one side is the cyclical story: softer U.S. growth data, rising expectations of Fed cuts, and a weaker dollar. On the other is the structural story: strong official-sector purchases and persistent global instability. Together, those forces form the basis for a more constructive gold outlook than the bank previously held.
While UBS did not present this as a guarantee of uninterrupted gains, its updated targets indicate that it believes the broader trend remains upward. If rate-cut expectations strengthen further, if central banks continue accumulating reserves at elevated levels, or if geopolitical strains worsen, those conditions could reinforce the bull case outlined in the bank’s note.
In practical terms, UBS is signaling that gold’s rally is not being viewed as an isolated event. Rather, it sees the move as part of a wider adjustment in investor expectations around interest rates, reserve management, and global risk. That combination has already pushed prices to new highs, and UBS now believes it can carry the metal higher over the coming quarters.