Gold is 2025’s best performer. UBS sees more upside

Investing.com -- Gold has emerged as the strongest performing asset of 2025, outpacing equities, bonds, currencies and even Bitcoin. 

The metal has gained 28% year to date, putting it at the top of the performance table, according to UBS’s Chief Investment Office. 

Spot gold was at $3,337 per ounce on Aug. 18, and UBS now forecasts it will reach $3,500 by December. 

The bank has also raised its 2026 projections, with targets of $3,600 by March and $3,700 by June and September.

The bank cited several factors behind the surge. Concerns over U.S. fiscal sustainability, questions about the Federal Reserve’s independence, and persistent geopolitical tensions are seen supporting de-dollarization trends and central bank demand for bullion. 

UBS flagged that central banks are expected to remain strong buyers this year, although purchases may come in slightly below last year’s near-record levels.

Investment flows into exchange-traded funds have also added to demand. The World Gold Council reported the strongest first-half ETF inflows since 2010, prompting UBS to lift its full-year ETF demand forecast to nearly 600 metric tons, up from an earlier projection of 450. 

Total (EPA:TTEF) global gold demand is now expected to rise 3% to 4,760 metric tons in 2025, the highest level since 2011.

The performance comes as gold has traded in a relatively tight range in recent weeks amid U.S. trade policy shifts, efforts toward a Russia-Ukraine peace deal and weaker U.S. labor data. 

UBS noted that inflationary pressures from tariffs and immigration restrictions, coupled with below-trend U.S. growth, could prompt the Fed to resume policy easing, further weakening the dollar. Lower real yields, in turn, reduce the opportunity cost of holding non-interest-bearing gold.

While risks remain, particularly if the Fed is forced to raise rates again, UBS maintains an “attractive” view on gold in its global asset allocation. 

The brokerage said diversification and hedging remain critical and sees gold continuing to play a central role in portfolios.