Gold price skyrockets, demand increases sharply in the first half of 2026

Demand for gold will continue to increase in the coming months, driven by interest rate cuts, falling bond yields, fiscal challenges and political chaos in the US, according to a new report from Union Bank of Switzerland (UBS - one of the world's largest financial and banking services corporations, headquartered in Switzerland).

Gold prices have recently recovered somewhat from their decline since late October, and we expect increased demand to support higher prices in the coming period. We believe that the continued interest rate cuts by the US Federal Reserve (Fed), real yields, increased fiscal risks and changes in the US internal political environment will reinforce the current strong buying trend from central banks and investors - UBS's Chief Investment Office wrote in an update on Thursday.

On November 20, UBS raised its target gold price forecast for mid-2026 to $4,500/ounce, from $4,200/ounce previously. The bank also raised the scenario to $4,900/ounce if political and financial risks suddenly increased, but kept the downward scenario unchanged to $3,700/ounce.

UBS analysts believe that the weak US fiscal outlook will continue to boost central bank and investor gold purchases, and they expect demand for gold ETFs to remain strong in 2026. However, they also warned that the possibility of the Fed becoming more tailor-made and the risk of central banks selling gold are key challenges for their optimistic outlook.

Previously, on November 3, UBS said that the current correction in the gold market is only temporary, and the scenario of geopolitical risks or increased markets could push gold prices up to 4,700 USD/ounce. The long-awaited correction has stalled, the report said. In addition to technical factors, we do not see any fundamental reasons for this sell-off.

The Swiss bank noted that the weak price increase has triggered a second decline in the number of contracts opened in the futures market, but emphasized that basic demand is still very strong.

UBS also cited the World Gold Council's Gold Demand trend report for the third quarter, which confirmed the "very strong and accelerated" buying level from both central banks and individual investors. Central bank purchases have reached 634 tons since the beginning of the year, although slower than the same period last year, but are accelerating in the fourth quarter, in line with the forecast of 900 - 950 tons for 2025 - the report said.

Capital flows into ETFs reached 222 tons, while demand for gold bars and coins surpassed 300 tons for the fourth consecutive quarter, showing continued investment appetite. G devolutionary demand is not as weak as it was, UBS commented.

We prioritize buying when gold corrects, the analysts said, stressing that investors are still allocating below the required level for the precious metal. UBS recommends allocating a one-digit average to gold in the portfolio.

Technically, the bulls' upside target for February gold contracts is to close above the strong resistance level at the November peak of $4,285.6 an ounce. The short-term downside target for the bears is to pull prices below the important support level of $4,000/ounce.

The first resistance level was recorded at 4,250 USD/ounce, then 4,285.6 USD/ounce. First support was at the bottom of overnight at $4,174.6 an ounce, followed by $4,150 an ounce.