UBS ups long-term gold price forecast to $2,800 on higher costs, strategic demand

Investing.com -- UBS has raised its long-term real {{8830|{{8830|{{8830|{{8830|gold}}}}}}}} price forecast to $2,800 per ounce from $2,200, implying nominal prices around $3,100 by 2030 when adjusted for inflation.

While short- and medium-term estimates remain unchanged, the bank continues to expect {{8830|{{8830|{{8830|{{8830|{{8830|gold}}}}}}}}}} to hit new highs in the coming quarters before easing towards the end of next year or early 2027.

“Prices should ease thereafter, but the correction is unlikely to be steep enough to bring gold back to previous cycle lows,” strategists led by Joni Teves added.

“Instead, we see a scenario where, after a period of moderation and stabilization, gold settles at significantly higher levels than in previous cycles,” they said.

The upward revision partly reflects “structurally higher production costs” and expectations for limited mine supply growth, as producers favour organic expansion, regional consolidation and portfolio adjustments over large-scale M&A.

UBS also pointed to gold’s “broadening investor base” and its continued relevance as a strategic asset in an environment of shifting global trade and political relationships, elevated macroeconomic risks and persistent geopolitical tensions.

“In an environment where global trade and political relationships are shifting, macroeconomic risks are high and geopolitical risks persist, diversification is more crucial than ever,” the team continued.

“We think gold presents investors with one of the cleanest ways to hedge against these risks,” they said, adding that they expect core allocations to be more resilient than in the past, with investors more willing to accept the negative cost of carry in exchange for portfolio diversification benefits.

Physical consumer demand has weakened due to higher prices, with first-half volumes down 8% globally, led by jewellery. However, this has been offset by robust physical investment, particularly in Europe—where bar and coin demand more than doubled—and in Asia-Pacific, which saw 17% year-on-year growth and accounts for about two-thirds of global demand.

Official sector purchases have slowed to an annualised 800–850 tonnes, still above historical averages.

UBS notes that summer trading conditions are likely to persist in the near term, offering opportunities to build positions ahead of the “next leg higher.”

The next significant move will likely align with “deterioration in the inflation/growth mix in the U.S., a pull back in equities and markets anticipating Fed rate cuts,” strategists said, while any concern over policy missteps by the Federal Reserve could act as a bullish catalyst