UBS sets $2,700 gold target for 2025 amid global uncertainty

Swiss investment bank UBS remains optimistic about gold’s potential, citing key factors that continue to boost the metal’s value. 

Despite gold reaching a record high of $2,630 per ounce and a 27% rise in 2024, UBS believes there is further upside in the metal’s price, projecting a target of $2,700 per ounce by mid-2025. 

In a report released Monday, UBS highlighted the Federal Reserve’s recent 50-basis-point rate cut as a major contributor to gold’s continued strength. 

Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, which UBS noted will likely attract more investor funds. 

"As returns on cash are eroded by this lower interest rate environment, more investor funds may end up redirected into assets like gold," UBS explained. 

UBS also expects additional rate cuts in 2024 and 2025, which could further enhance gold's appeal. 

Additionally, heightened geopolitical tensions, particularly ongoing conflicts between Israel and Hezbollah and between Ukraine and Russia, continue to support gold’s role as a safe-haven asset. 

Demand from central banks and investors remains strong, with central bank purchases accounting for 25% of total gold demand. 

Gold exchange-traded funds (ETFs) have seen four consecutive months of inflows, further driving the metal's rally. 

UBS reaffirmed its bullish stance on gold, stating, “We remain Most Preferred on gold in our global strategy, with a target of USD 2,700/oz by mid-2025. 

Despite the rally, we believe gold’s hedging properties remain attractive." 

In addition to physical gold, UBS suggests that investors may consider exposure through structured strategies, ETFs, or gold miner equities. 

UBS remains confident in gold's continued performance amid ongoing economic and geopolitical uncertainties.