UBS advises clients to view recent declines in gold as a strategic entry point, citing lower real yields, a resilient dollar, and ongoing official-sector purchases as key support factors for the precious metal’s medium-term prospects.
UBS is telling clients to view weakness in gold as a chance to add exposure, arguing that the metal’s medium-term case remains intact even if near-term gains are likely to be uneven. The bank’s view rests on a combination of lower real interest rates, a softer dollar and continued official-sector buying, with any drop towards $4,000 an ounce or below framed as an entry point rather than a warning sign.
The Swiss bank expects inflation to ease gradually, allowing the Federal Reserve to keep policy steady through 2026 before resuming cuts in 2027. UBS says that shift should pull real yields lower, reduce the appeal of cash and fixed income and improve the outlook for bullion, which does not pay income. In a separate note, UBS said gold has already climbed sharply this year and reiterated that it sees the metal as a hedge against political and economic uncertainty.
The dollar is central to the call. UBS sees the currency as capable of staying firm in the near term, but says large US fiscal and external deficits, together with heavy investor exposure to dollar assets, leave it vulnerable later on. The bank argues that a renewed move by investors to diversify away from the dollar would be supportive for gold, as a weaker greenback has historically made the metal more attractive to overseas buyers.
Central banks remain the other major support, UBS said, with official institutions continuing to accumulate gold even when private investment demand softens. The bank expects purchases to stay elevated, helped by a longer-term effort to reduce dollar exposure in reserves. It put full-year central bank demand at 750 to 1,000 metric tons after around 290 metric tons were bought in the second quarter, saying those flows are unlikely to drive prices sharply higher on their own but should help cushion the market. UBS has also said that periods of weakness towards $3,850 to $4,000 an ounce may prove more useful for building positions than for abandoning them.
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