Gold Prices Rally Toward $5,000 Target as UBS Sees Favorable Backdrop

Gold prices have surged over the past week, gaining more than 8% in five sessions. The rally has been driven by increased buying from Chinese investors and inflows into exchange-traded funds (ETFs).

The recent decision by the United States and Japan to support the yen has eased fears of a sell-off in US Treasurys, which would have pushed bond yields higher and created a headwind for precious metals.

UBS analysts are optimistic about gold's prospects, citing a favorable backdrop for the metal. They expect inflation to moderate gradually, allowing the Federal Reserve to hold interest rates steady this year before resuming easing in 2027.

This shift toward lower policy-rate expectations would likely reduce real yields, weigh on the US dollar, and boost investment demand for gold, according to UBS chief investment officer Ulrike Hoffmann-Burchardi.