UBS expects the gold bull market to continue, with increased upside risks

Investing.com - UBS keeps a bullish outlook for gold and expects gold to reach fresh highs this year as upside risks intensify, UBS strategist Joni Teves said in a report on Thursday.

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In recent weeks, gold has been under pressure as markets focus on the inflation impact of rising oil prices and the outlook for further interest-rate hikes, with higher U.S. real yields and a stronger U.S. dollar weighing on gold prices.

However, Teves sees pullbacks as a buying opportunity. “Risks are rising that the gold bull market will extend for several more years. Growth slowdown will trigger fiscal and/or monetary stimulus, which will create upside risks for gold,” Teves said.

“Our outlook for gold has not changed; we maintain our view that gold should set new highs this year. We believe any pullbacks will provide an opportunity for investors to rebuild positions,” he added.

UBS forecasts the average gold price in 2026 at $5,000 per ounce, down 4% from its prior estimate of $5,200. This adjustment reflects market changes since gold retreated after hitting an all-time high in late January. The bank’s forecasts for 2027 and 2028 remain unchanged at $4,800 and $4,250, respectively.

Teves said speculative positions have been cleaned up, and ETF outflows have been brought under control, leaving room for investors to rebuild positions. Chinese gold ETFs have continued to see net inflows, and domestic physical demand remains healthy, the strategist said, which could keep imports strong in the second quarter.

UBS believes the market is under-invested and said it will treat any pullbacks toward the $4,000 level as an opportunity to build positions. “The gold market has undergone a structural shift, and an increasing number of investors in both the private and public sectors view it as a long-term strategic asset, which helps diversify and protect portfolios,” the report said.

For silver, UBS cut its 2026 forecast from $105 to $91.9 per ounce, though the bank still expects silver to outperform gold when prices rise. Teves warned that silver’s role as an industrial metal makes it vulnerable to global growth slowdowns, which could weigh on demand and dampen investor sentiment.

Therefore, he said the gold-to-silver ratio may “struggle to retest this year’s earlier lows.” The ratio may only bottom out in the 50–60 range rather than returning to the roughly 40 level seen earlier this year.

Similar headwinds face platinum and palladium from weak industrial demand, although both may be supported by supply concerns, particularly if tensions in the Middle East disrupt South Africa’s mining operations, the strategist said.

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