UBS Bank has just lowered its gold price forecast for the end of 2026 from $5,900/ounce to $5,500/ounce due to concerns about pressure from high US bond yields and the continued strengthening of the USD.
In the latest report, two experts Dominic Schnider and Wayne Gordon of UBS believe that investors are becoming more cautious with gold as the actual yield level continues to be high.
The market is returning to paying attention to the opportunity cost factor. The non-interest-generating nature of gold is becoming a more worth considering issue as real interest rates remain high," the two experts said.
UBS said that investment demand through gold ETFs and the futures contract market has weakened significantly. Although capital flows have recently somewhat stabilized, this is still not enough to restore the strong increase in gold as in early 2026.
However, UBS does not believe that the long-term upward trend of gold has ended. The bank still forecasts that gold prices will increase by about 1,000 USD/ounce compared to the current level by the end of this year.
Stepping into 2027, UBS expects a more neutral monetary policy environment to weaken the USD and help investment demand for gold improve again.
Although more cautious with gold in the short term, UBS still assesses the long-term outlook for the commodity group as quite positive.
Mr. Giovanni Staunovo - A commodity expert at UBS believes that commodity prices such as gold and oil may continue to remain high even after the Iranian conflict ends.
Tensions in Iran and risks around the Strait of Hormuz continue to put upward pressure on prices and volatility for the commodity market, especially oil," he said.
According to UBS, before the attacks on Iran, Brent oil prices were only around 72 USD/barrel, but then increased to more than 100 USD/barrel.
Meanwhile, gold prices are still about 13% lower than the historical peak set in January, mainly due to expectations of stronger interest rate hikes since Middle East tensions escalated.
UBS said that the UBS CMCI commodity index has increased by about 17% since the beginning of the year.
Although the geopolitical risk compensation may gradually decrease over time, UBS still assesses that the basic foundation of the commodity market is quite positive.
According to Mr. Staunovo, energy product inventories in many economies are low, which may cause oil prices to continue to remain high to curb demand before reserves are replenished.
In the medium term, we still expect gold to rise sharply if geopolitical instability continues while interest rate expectations begin to cool down," he said.
UBS also forecasts that the shortage of copper and aluminum supply may continue to support the prices of industrial metals in the medium term, especially when the trend of electrification still drives long-term demand.
According to UBS, goods often have positive developments during the supply-demand imbalance period or when inflation and geopolitical risks increase.
For investors who tend to prioritize gold, maintaining a reasonable proportion in the portfolio can help diversify assets and hedge against systemic risks," UBS said.
This bank also recommends that investors who are holding large amounts of gold and have high profits should expand to other commodity groups such as copper, aluminum or agricultural products to diversify profit sources in the future.
Notably, in March, UBS predicted that gold prices could rise to the 5,900–6,200 USD/ounce range by the end of 2026.
According to UBS, gold no longer simply reacts as a war shelter but is playing a defensive role against monetary risks such as currency devaluation, budget deficits and economic growth slowdown caused by geopolitical conflicts.
UBS also emphasized that basic demand for gold is still quite solid.
Although ETF funds once reduced gold holdings at the beginning of the month, capital flows are now more stable. Meanwhile, hedge funds have also begun to slightly increase gold buying positions," the report said.
In addition, central banks of countries continue to buy gold, increased investment activities and jewelry demand in Asia increasing according to people's income are still important supporting factors for the gold market in the long term.
UBS also believes that the trend of diversifying foreign exchange reserves away from the USD and high global public debt will continue to strengthen the role of gold in the long term.
In the context of global economic and political instability remaining large, gold continues to be an effective tool for diversifying investment portfolios," UBS emphasized.
