UBS says gold may retest support around $4,000 an ounce in the near term. The bank expects structural dip buyers to establish a floor at that level. It sees prices resuming an uptrend toward year-end and into 2027.
UBS expects dip buyers to hold gold near $4,000 an ounce, even though the metal may first retest support around that level in the near term.
Strategist Giovanni Staunovo said in a note Friday that gold has fallen as rising U.S. real yields and a stronger dollar raise the opportunity cost of holding the metal.
Why UBS sees resilience
Staunovo nonetheless argues that gold has held up against the jump in yields. UBS noted that gold's sensitivity to real rates has weakened, which suggests structural demand is providing a stronger offset than in previous cycles.
The bank pointed to central bank diversification, concerns over rising public debt and debt-servicing costs, an expected weaker dollar over time, and robust Chinese buying. In addition, central bank purchases kept up a solid pace in September, according to preliminary data, and UBS continues to expect annual central bank buying of 750 to 1,000 metric tons.
Outlook tied to real yields
As markets reassess the scope for further Fed tightening, UBS expects lower real yields to lift prices. It sees gold stabilizing and resuming its uptrend toward year-end and into 2027.
Staunovo says pullbacks toward $4,000 an ounce create a chance to add exposure. According to UBS: "Overall, we believe the long-term investment case for gold remains positive."
Source: Investing.com
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