UBS Flags Dips Below $4,000 Gold as Buying Chances Amid Falling Real Rates

UBS believes that falling real interest rates will revive investment demand for gold. According to the bank, lower policy-rate expectations will pull down real yields and weigh on the dollar, drawing fresh investment flows into the metal.

The Swiss bank expects inflation to moderate gradually through the remainder of 2026, allowing the Federal Reserve to keep rates steady through that year before resuming easing in 2027. This shift towards lower policy-rate expectations should reduce real yields, pressuring the dollar and supporting gold.

UBS sees room for the dollar to hold up in the near term but points to structural pressures, including sizeable US fiscal and external deficits, as reasons for renewed weakness further out. A softer dollar has historically been supportive of gold, and the bank adds that any renewed push by investors to diversify away from the currency would likely benefit the metal further.

Central banks remain a key pillar of support for the market, continuing to buy even through stretches when private investment demand is soft. UBS expects official-sector buying to stay elevated over the coming year, underpinned by a longer-term push among central banks to trim their dollar holdings.