UBS, an investment bank, has extended its forecast horizon for the gold price by one quarter, setting a target level of $5,400 per ounce by the end of September 2027. The bank expects further price growth, driven by declining real interest rates and sustained investment demand. The new target level suggests that disinflation in 2027 will create conditions for a easing of the United States’ monetary policy, and the dollar will continue to weaken broadly, UBS strategists noted. The bank’s forecast for the end of 2026 remains unchanged and stands at $4,600 per ounce.

In recent days, the price of gold has been rising amid investors’ reassessment of forecasts regarding the US monetary policy and the dollar exchange rate. Uncertainty on the part of the Federal Reserve regarding the short‑term path of interest rates, as well as weakening data on the US labour market, have heightened expectations that the regulator may keep rates unchanged, provided that inflation remains subdued. Demand for the precious metal has also intensified. Inflows into gold exchange‑traded funds have resumed: first led by China, and then by Europe, while purchases by central banks remain stable. According to the World Gold Council, net purchases by central banks in June amounted to fifty‑one metric tons. The People's Bank of China added twenty metric tons to its reserves in July, which was the largest monthly increase since October 2023.

UBS strategists identified three conditions necessary for gold to continue its rally: further weakening of the dollar, a decline in expected real interest rates in the US, and strengthening investment demand. The bank's baseline scenario assumes that the Fed will leave rates unchanged in September, although analysts have pointed to uncertainty regarding possible rate hikes later this year. On the demand side, UBS estimated that for more sustainable gold trading at the level of five thousand dollars per ounce and above, investment demand of about five hundred metric tons per quarter will be required. The higher long‑term forecast reflects the bank’s position that disinflation may become a more pronounced theme in 2027, which will be facilitated by favourable base effects and the expectation that economic activity in the US will be at or below the trend level.

Given these prospects and the increased volatility of options, strategists have stated that they prefer volatility selling strategies to generate additional returns. Price pullbacks to $4,000 per ounce, in their view, create opportunities to build up positions in gold. The main risk to this scenario is an increase in the Fed rate this year. According to UBS, this could raise real yields, support the dollar, and weaken demand for the precious metal. In such a negative scenario, the price of gold could fall to $3,850 per ounce.

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The material was prepared solely for informational and educational purposes and does not constitute financial advice or a recommendation.