Gold Forecast Still Holds Up Despite Price Drop

Despite a recent decline in gold prices to below $4,310 an ounce, UniCredit remains bullish on the metal's prospects. The bank has raised its forecast range for end-2026 to $4,400-$5,200 per ounce.

This prediction is built on three key factors: central banks' continued accumulation of gold, rising concerns about fiscal sustainability and long-term inflation risks, and recovering investment demand through exchange-traded funds (ETFs).

UniCredit notes that central banks have been buying gold at a steady pace, with 289 tonnes purchased in the second quarter alone. Additionally, investors are becoming increasingly anxious about government debt and future inflation, both of which historically boost interest in gold.

However, the bank acknowledges that interest rates remain a significant challenge for gold prices. A steepening Treasury curve and rising bond yields have weakened the metal's appeal, at least temporarily.