Overview#
UBS has projected that gold prices could reach $5,900 per ounce by late 2026. This forecast is influenced by several economic factors, including uncertainty surrounding U.S. midterm elections, tariff negotiations, a weaker U.S. dollar, and declining real interest rates.
Current Gold Market Trends#
In its review of the World Gold Council's first-quarter data, UBS noted that gold averaged $4,873 per ounce during this period, with prices peaking above $5,500 before experiencing a pullback. Despite recent volatility, particularly due to the ongoing Iran War, structural demand for gold remains strong.
Investment Demand on the Rise#
UBS highlighted that investment demand is currently the main driver of gold purchases. Notably, bar and coin purchases surged by 42%, totaling 474 metric tons, largely due to increased interest from Asian markets. Additionally, central banks increased their gold purchases by 3%, reaching 244 metric tons. Exchange-traded funds (ETFs) also saw net positive inflows of 62 metric tons, despite some outflows in the U.S. market towards the end of the quarter.
Jewelry Demand and Future Outlook#
While jewelry demand fell by 23% to 300 metric tons, overall spending on jewelry increased by over 30%. UBS maintains its demand forecast for 2026 at 900 metric tons. The bank believes that near-term price gains may be constrained by high real yields and a stronger dollar due to the oil shock, but views the recent price weakness as temporary.
UBS concludes that the combination of political uncertainty, expectations of a weaker dollar, and declining real interest rates will likely boost ETF inflows and central bank demand, potentially driving gold prices toward $5,900 per ounce by late 2026.