UBS Group has become the latest bank to raise its gold price forecast due to the growing risk of a prolonged global trade war.
Gold prices are forecast to reach $3,200/ounce in the next 4 quarters, up from the bank's previous forecast of $3,000/ounce, analysts Wayne Gordon and Giovanni Staunovo said in their updated forecast on March 17.
Experts say gold could hit $3,200 an ounce due to escalating trade conflicts and gold being seen as a safe-haven investment in times of uncertainty.
In the gold price forecast update, UBS Group pointed out that President Donald Trump's plan to impose mutual Taxes and additional tariffs on each industry on April 2 could boost demand for gold across the markets.
Gold prices surpassed the key psychological threshold of $3,000/ounce for the first time since March 14. Gold has risen 14% so far this year, extending its strong growth since 2024.
According to Bloomberg, gold also benefits from the deterioration of the US economy as traders now believe that the US Federal Reserve (Fed) will have additional interest rate cuts as the risk of recession increases.
"We still believe that allocating about 5% of a USD-balanced portfolio to gold is optimal in terms of long-term diversification" - UBS Group experts stated.
Before UBS Group, some other banks have raised their gold price forecasts in recent weeks. Last week, Macquarie Group forecast gold prices to skyrocket to $3,500/ounce in the second quarter of 2025, while BNP Paribas raised their forecast, showing that the average gold price will be much higher than $3,000.
According to analysts, strong demand for gold from central banks will also continue to act as an important structural support, while pointing to signals that gold purchases may be close to recent years levels - about 1,000 tons per year.
According to Reuters, gold prices increased sharply on March 17 after reaching a historical milestone last week due to geopolitical tensions, concerns about tariffs escalating trade conflicts and the possibility of the Fed continuing to cut interest rates.
Spot gold prices rose 0.1% to $2,986.53/ounce as of 3:07 a.m. on March 17, GMT. World gold prices increased beyond the 3,000 USD/ounce mark and reached a record high of 3,004.86 USD on March 14.
Kelvin Wong - senior market analyst for the Asia-Pacific region at financial services company OANDA - commented that the recent increase in gold prices is due to concerns about stagnant inflation. The short-term momentum is forecast to remain positive, with prices held back at $3,016 or $3,030.
Gold prices are expected to increase amid persistent geopolitical tensions as the US has said it will continue to attack Houthi forces in Yemen until they stop attacking Israeli ships and airstrikes in Gaza, killing at least 15 Palestinians in the previous 24 hours.
Gold is often seen as a hedge against political risks and inflation. The market is now waiting for the Fed's next monetary policy meeting on March 19 and Fed Chairman Jerome Powell will give a policy speech afterwards.
