Gold Prices Surge: UBS Sees Strong Medium-Term Case

UBS Global Wealth Management is reaffirming its support for gold as an investment in diversified portfolios. The bank's chief investment office believes that the medium- to long-term case for holding gold remains strong, supported by lower real rates, a softer dollar, and central bank buying.

A recent surge in gold prices above $4,250 per ounce has been driven by reported Chinese institutional buying and inflows into exchange-traded funds. UBS expects gold prices to rise toward $5,000/oz in the first half of 2027, citing a durable drivers such as lower real rates and central bank demand.

However, near-term risks remain, including US data staying firm, oil prices keeping inflation concerns alive, or markets continuing to price in a more hawkish US Federal Reserve rate path. UBS thinks investors should separate near-term trading risk from the longer-term investment case and consider a mid-single-digit gold allocation in a well-diversified portfolio.

Arun Sai, senior multi-asset strategist at Pictet Asset Management, has also upgraded his view on gold to overweight, citing strengthening investor demand and emerging market central banks increasing reserves. Sai sees further upside for gold as real interest rates gradually ease, eroding the opportunity cost of holding a non-yielding asset.