Gold Price Forecast in Jeopardy as Market Downturn Hits UniCredit's $5,200 Target

The gold price has taken a hit, falling below $4,310 an ounce after a 48-hour decline of almost 3%. This drop has put pressure on UniCredit's upgraded forecast, which sees the gold price rising into a $4,400, $5,200 range by year-end.

UniCredit remains constructive on gold and expects structural demand to lift bullion. The bank points out that central banks continue to accumulate gold, providing a strong anchor for demand. Additionally, the steepening Treasury curve indicates growing concerns about fiscal sustainability and long-term inflation risks, factors that have historically strengthened the appeal of gold.

While UniCredit's forecast is supported by data from the World Gold Council, which recorded net official-sector purchases of 289 tonnes during the second quarter, the current market conditions are challenging. The recent surge in oil prices and global bond yields has increased the opportunity cost of holding non-yielding bullion and strengthened the US Dollar.