Gold prices opened the first trading sessions of the new week quite positively, almost completely erasing the sharp decline in the last session of the week.
Gold's rally is being driven by a series of political and trade uncertainties. According to Mr. Sagar Khandelwal - strategist of UBS Global Wealth Management, real interest rates falling, the weaker US dollar, increased public debt and escalating geopolitical tensions could push gold prices to $4,700/ounce in the first quarter of 2026, while stocks of gold mining enterprises could increase faster.
Gold has gained more than 60% this year, surpassing all other assets, as the US government's shutdown and trade tensions return have added new momentum to the market. While the scale and pace of strong growth could increase volatility, we still believe that gold is an important component of a sustainable investment strategy, he wrote.
Mr.handelwal warned that real US interest rates could fall into the negative zone when the FED cuts interest rates in the context of persistent inflation.
We believe this will weaken the attractiveness of the US dollar and boost investment flows into gold, he said.
According to the World Gold Council, global gold ETFs recorded a capital flow in September of up to 17 billion USD, bringing the total capital flow in the past three months to 26 billion USD - the highest level in history.
UBS believes that investment demand could increase further, especially as the central bank continues to buy gold strongly, helping total global demand this year reach about 4,850 tons - the highest since 2011.
If individual investors start diversifying from US Treasury bonds to gold like the trend of central banks spot prices could increase even more, said Mr. Khandelwal.
In the context of many potential uncertainties in the economy, politics and policy, we expect capital to continue flowing into this precious metal, which could push prices up to $4,700/ounce in the most positive scenario. With a low correlation between gold and stocks and bonds especially in a period of market fluctuations, we recommend maintaining an average gold ratio in a diverse portfolio.
He said investors could also consider gold mining companies, as their profits could rise faster than gold prices in the next six months.
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