Gold Prices May Hit $5,000/oz by Mid-2027 on Lower Real Rates and Weaker Dollar

UBS analysts predict that gold prices could challenge $5,000 per ounce in the first half of 2027 due to lower real rates, a softer US dollar, and strong sovereign demand. The Swiss bank's strategists pointed out that gold has broken out of its recent trading channel, rising above the $4,250 resistance area for the first time in two months.

This breakout was supported by reported Chinese institutional buying and inflows into exchange-traded funds (ETFs), as well as joint government efforts to stabilize the yen. However, UBS warned that near-term risks remain, particularly if US data stays firm, oil prices keep inflation concerns alive, or markets continue to price in a more hawkish Federal Reserve rate path.

The analysts expect lower real interest rates to reignite investment demand for gold, with inflation moderating and the Fed holding interest rates steady this year before resuming easing in 2027. This shift would likely reduce real yields, weigh on the US dollar, and boost investment demand for gold.