Since the beginning of this year, international gold prices have continued their strong upward trend. Although recent prices have experienced some volatility, they have remained stable above US$4,000 per ounce. The UBS Global Wealth Management Chief Investment Office (CIO) team pointed out that gold has surged nearly 60% year-to-date, making it the best-performing asset of the year. Expectations of Fed rate cuts, declining real yields, and geopolitical uncertainties are expected to further drive gold demand. The team has raised its gold price target for mid-2026 by 7.14%, from US$4,200 to US$4,500 per ounce.
Global Gold Demand Expected to Keep Rising Next Year
In an email to reporters, the UBS CIO team noted that, given the potential further deterioration of the US public fiscal outlook, central banks and investors are likely to continue their gold-buying trend. On the other hand, as real interest rates decline, gold ETF inflows are expected to rebound next year.
The UBS CIO team added that even during periods of higher interest rates and a stronger US dollar, substantial gold purchases by central banks and sovereign wealth managers have contributed to the structural rise in gold prices. This trend is expected to continue over the next year. Preliminary estimates suggest that these buyers may purchase around 900 tons of gold in 2026, slightly lower than this year's volume but still significantly higher than the annual average of 450 to 500 tons between 2010 and 2021.
Gold Prices to Remain on Long-Term Upward Trajectory
Jin Qianjing, Chief Asset Allocation Strategist at Shenwan Hongyuan Securities, stated that the current gold price surge has significantly exceeded historical averages, driven primarily by a shift in gold's pricing logic. Rising U.S. fiscal deficits and ongoing central bank gold purchases will support further long-term price increases. She emphasized that amid fiscal and monetary easing policies, debt risks in Europe and the U.S. continue to accumulate, sustaining marginal demand for gold and pushing prices higher. "Gold prices are still on a long-term upward trend," she said.
The UBS CIO team maintains that gold remains an "attractive" investment and recommends investors continue to hold gold in their global asset allocations. At current price levels, gold remains an effective portfolio hedge. If international political and financial risks escalate sharply next year, gold prices could rise to US$4,900 per ounce. However, after the 2026 U.S. midterm elections, prices may consolidate around US$4,300 per ounce. The bank suggests maintaining a gold allocation of around 5% in global asset portfolios to cushion against potential systemic risks.
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