Gold is facing resistance at $2,400 but the precious metals market rally will continue according to UBS. They predict gold prices to reach $2,500 an ounce by September and $2,600 by year-end, up from earlier estimates of $2,400 and $2,500.
UBS also predicted that gold prices will reach $2,700 per ounce by June 2025 in its latest 12-month forecast.
Analysts mentioned three reasons for gold prices going up. The first reason is the Federal Reserve’s support. Even though the U.S. central bank is not planning to lower rates now due to high inflation, UBS believes rate cuts will happen soon.
Analysts predict that lower interest rates will make investing in gold more appealing to Western Investors, drawing them back to gold-backed exchange-traded funds. Market expectations from the CME FedWatch Tool suggest the Federal Reserve will likely keep interest rates steady until summer, with a possibility of a rate cut in September.
“We acknowledge the considerable uncertainty around the path of rates in the short term, but we see rates falling, and this typically drives ETF inflows, which is our next key catalyst,” the analysts at UBS said.
Central banks are expected to keep buying a lot of gold this year, which could help keep the prices high. The World Gold Council data shows that official gold reserves have been going up by over 1,000 tonnes every year for the past two years.
UBS predicts China will lead the market as the theme continues.
“While recent People’s Bank of China data show a moderation in gold purchases, Swiss trade data signal strong buying continuing in China,” as said by analysts.
Geopolitical instability boosts gold demand, influencing bank’s forecast.
“We expect ongoing geopolitical uncertainty to support hedges like gold, with the US election approaching, wars in the Middle East and Ukraine ongoing, and heightened US-China trade tensions,” the analysts said.
UBS predicts gold prices will rise and suggests buying during price drops at $2,300 per ounce.
