UBS Puts Faith in Gold's Long-Term Prospects Amid Near-Term Volatility

Wealth managers at UBS Global Wealth Management are optimistic about the prospects of gold in investors' portfolios, despite near-term risks. The gold price has jumped to its highest level in seven weeks, exceeding $4,250 per ounce.

According to UBS's chief investment office, the medium- to longer-term case for holding gold remains strong, supported by lower real rates, a softer dollar, and central bank buying. Arun Sai, senior multi-asset strategist at Pictet Asset Management, has also upgraded gold from neutral to overweight due to strengthening investor demand and emerging market central banks' increased reserves.

UBS expects inflation to moderate gradually, allowing the Fed to hold interest rates steady in 2026 before resuming easing in 2027. This should create a more favorable backdrop for gold, as a shift towards lower policy-rate expectations would likely reduce real yields and boost investment demand for gold.