UBS believes the gold run will go further as haven demand rises

by Sybilla Gross

UBS Group AG became the latest bank to raise its price outlook for gold on increasing chances of a protracted global trade war — a scenario that analysts expect will continue to drive investors to scoop up more of the ultimate haven asset.

Bullion is set to trade at $3,200 an ounce in the next four quarters — an upward revision from the bank’s previous long-held forecast of $3,000 — with an escalating trade conflict underscoring the precious metal’s role as a store of value in uncertain times, analysts including Wayne Gordon and Giovanni Staunovo, said in a note on Monday.

The bank pointed to US President Donald Trump’s plan to impose both broad reciprocal tariffs and additional sector-specific tariffs on April 2 as a looming risk event that could spur ongoing haven demand across markets. Gold — which breached the key psychological threshold of $3,000 an ounce for the first time ever on Friday — will also benefit from a worsening outlook for the US economy, with traders now pricing in additional interest-rate cuts by the Federal Reserve as concerns about a recession rise.

“In other words, we are seeing a shift from a ‘Trump put’ to a ‘Fed put’,” said the analysts. “We continue to believe allocating around 5% of a USD balanced portfolio to gold is optimal from a longer-term diversification standpoint.”

UBS joins a number of other banks that have in recent weeks hoisted their price targets for the yellow metal. Last week, Macquarie Group forecast prices would spike to $3,500 an ounce in the second quarter, while BNP Paribas SA raised its outlook to show average prices well above $3,000.

Stronger inflows into bullion-backed exchange-traded funds have also started to materialize, the UBS analysts said, adding that ongoing demand for these investment vehicles remains a key requirement for prices to go even higher. Robust appetite from central banks will also continue to act as a “crucial” structural support, the analysts said, pointing to signals that purchases “could be again close to the levels of recent years — around 1,000 metric tons annually.”

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