Gold Prices Expected to Soar to $5,400 as US Dollar Weakens

Gold prices are expected to rise as the US dollar weakens, according to Swiss bank UBS. The bank forecasts that gold will increase sharply towards $5,400 per ounce in the next 12 months.

The trend of diversification away from the USD is supporting gold prices. This trend may continue due to concerns about the US fiscal outlook and instability in trade policy. Many countries are also diversifying their foreign exchange reserves, which is another driving force behind rising gold prices.

UBS believes that the downward trend of the USD will continue in the medium and long term. The bank also points out that capital inflows into gold ETFs have begun to return, while central banks' gold buying activities remain at a high level.

The People's Bank of China (PBoC) increased its gold reserves by 20 tons in July, which is the largest monthly increase since October 2023. Central bank demand may not be enough to push gold prices up sharply on its own, but it will help stabilize the market and compensate for areas with weaker demand.