In the report "Gold price upward momentum has support" released on August 6, the Swiss multinational investment bank and financial services company (UBS) maintained a positive outlook on gold price prospects and forecast that the precious metal could reach 5,000 USD/ounce in the first half of 2027.
Notably, this forecast was made in the context that gold prices have just gone through a period of strong fluctuations. After fluctuating around the 4,000 USD/ounce range, the precious metal has regained its upward momentum, reflecting the return of investment cash flow and the need to seek risk-weighted assets.
UBS believes that the upward trend of gold is still fundamental, although the road ahead may not be smooth. Fluctuations in inflation, US economic data, oil prices and monetary policy of the US Federal Reserve (Fed) will continue to create market corrections.
However, in the medium and long term, UBS sees three major drivers that may continue to push gold prices up to higher price ranges.
Three major pushes behind the 5,000 USD/ounce target
The first driving force is the prospect of reduced real yields. Gold does not yield interest rates, so high real yields often increase the opportunity cost of holding precious metals. Conversely, when monetary policy prospects become less tight and real yields tend to decrease, gold's attractiveness is often improved.
UBS believes that inflation and monetary policy developments in the coming time may create a more favorable environment for gold. If inflationary pressure continues to cool down and the Fed has conditions to switch to less rigid monetary policy, gold may receive more push from changes in the interest rate environment.
The second factor is the prospect of the USD weakening in the medium term. The greenback has a major impact on the gold market because the price of precious metals is valued in USD. A weakened USD often makes gold more attractive to investors holding other currencies.
According to UBS, issues related to the US deficit and the trend of portfolio diversification may continue to put pressure on the USD in the long term. This is an important factor in supplementing the upward outlook for gold.
The third driving force, and also a particularly important foundation, is the demand for gold from central banks. UBS continues to assess that the gold accumulation activity of central banks will play a role as a major support for the market.
According to the organization's forecast, the amount of gold purchased by central banks in 2026 could reach 750 – 1,000 tons. Stable demand from this large buyer group may help the gold market maintain high prices, even when some other demand segments weaken.
Not increasing vertically, but the 4,000 USD zone is still noteworthy
UBS's 5,000 USD/ounce target does not mean that gold prices will continue to increase from now until the first half of 2027.
The market is still facing many factors that may create pressure in the short term. Stronger US economic data than expected, re-inflation or energy prices escalating may force the market to raise expectations for a tougher monetary policy. At that time, rising yields and a stronger USD could trigger profit-taking waves for gold.
However, these corrections are considered by UBS as factors to be monitored for long-term investment strategies. This organization believes that price decreases bringing gold back to the 4,000 USD/ounce or lower zone may open up opportunities to build strategic positions.
A noteworthy message from the UBS report is that gold can still fluctuate strongly in each period, but the basic drivers for the long-term trend have not weakened. The prospect of real yields going down, the weakening USD and strong gold buying demand from central banks are forming three important pillars.
With these factors, UBS continues to maintain a positive view and forecasts that gold prices may reach 5,000 USD/ounce in the first half of 2027. This price level also shows that the Swiss financial institution still assesses that gold's upward space is not over, although the precious metal will still have to go through periods of fluctuation before conquering new peaks.
