<p>Earlier this month, <a href="https://www.moneymetals.com/news/2025/08/05/citibank-does-180-on-gold-forecast-projects-new-record-highs-this-year-004244">Citi raised its gold forecast</a>. Another big bank, UBS, has now followed suit.</p>
<p>The Swiss investment bank nudged its Q1 2026 forecast gold price by $100 to $3,600 an ounce. This would mean new record highs over the next six months or so.</p>
<p>Gold hit a record high of $3,500 in April. The yellow metal has since consolidated and has generally traded sideways in the $3,300 range over the last few months.</p>
<p>UBS also raised its Q2 2026 gold forecast by $200 to $3,700 and added a third quarter ’26 target at the same level.</p>
<p>UBS analysts cited several factors influencing their bullish outlook, including U.S. macroeconomic risk, <a href="https://www.moneymetals.com/news/2025/03/11/de-dollarization-gold-and-a-shift-to-a-multipolar-world-003898">de-dollarization</a>, <a href="https://www.moneymetals.com/news/2025/08/04/central-bank-gold-buying-slows-in-q2-but-remains-far-above-historical-average-004241">central bank gold buying</a>, and strong <a href="https://www.moneymetals.com/news/2025/08/01/strong-physical-investment-demand-in-asia-drives-overall-gold-demand-higher-in-h1-004235">investment demand</a>.</p>
<blockquote>
<p style="text-align: left;">"Despite the dialing back of some trade frictions, we see U.S. macro-related risks, questions over Fed independence, worries about fiscal sustainability, and geopolitics underpinning de-dollarization trends and more central bank buying. In our view, these factors will drive gold prices even higher.”</p>
</blockquote>
<p>UBS analysts anticipate a stagflationary environment with “below trend” economic growth and <a href="https://www.moneymetals.com/news/2025/08/17/you-cant-blame-the-big-surge-in-producer-prices-entirely-on-tariffs-004274">sticky price inflation</a>. Despite the inflation issue, they expect the Federal Reserve to cut interest rates. The analysts said this combination of factors will lead to lower <a href="https://www.moneymetals.com/news/2024/06/21/real-interest-rates-and-why-they-matter-003271">real interest rates</a>, making gold a more attractive option.</p>
<p>UBS analysts are extremely bullish on gold investment demand, especially in the form of ETFs.</p>
<p><a href="https://www.moneymetals.com/news/2025/08/07/more-gold-flowed-into-etfs-in-july-004250" rel="noreferrer">Gold inflows into ETFs</a> through the first half of 2025 hit levels not seen since the pandemic, and that trend continued through July.</p>
<p>UBS raised its 2025 ETF demand forecast from 450 to nearly 600 tonnes.</p>
<p>ETFs are a convenient way for investors to play the gold market, but <a href="https://www.moneymetals.com/news/2024/03/08/paper-gold-vs-real-gold-its-important-to-know-the-difference-003038">owning ETF shares is not the same as holding physical gold</a>.</p>
<p>Meanwhile, UBS analysts expect central bank buying to continue to support the gold market.</p>
<blockquote>
<p>"Central bank purchases should stay strong, albeit slightly below last year's near-record purchases. We, therefore, now forecast global gold demand to increase by 3 percent to 4,760 tonnes in 2025, which would mark the highest level since 2011.”</p>
</blockquote>
<p>As for tariffs, UBS analysts expect rates to settle around 15 percent as more countries enter into trade agreements with the U.S., reducing some of the uncertainty surrounding trade.</p>
