UBS Boosts Gold Price Forecast to US$6,200/oz, Citing Strong Investment Demand
Top financial services firm UBS has significantly upgraded its outlook for the price of gold, projecting it to reach US$6,200 per ounce in the first quarter of the 2026 financial year. This represents a substantial increase from their previous forecast of US$5,000 per ounce and suggests a potential upside of nearly 25% from current market levels.
The current gold price stands at US$5,010 per ounce, having seen a 0.8% increase today. The revised UBS forecast, detailed in a new note from strategists Wayne Gordon (UBS Singapore) and Giovanni Staunovo (UBS Switzerland), anticipates gold holding steady around the US$6,200 mark through the March, June, and September quarters of FY26. A slight pullback to approximately US$5,900 per ounce is expected in the December quarter, following the US midterm elections in November.
Unpacking the Upgraded Gold Price Forecast
The rationale behind UBS’s more optimistic gold price prediction centres on anticipated higher investment demand, rather than an acceleration in central bank purchases, which had previously been a key driver.
Strategists Gordon and Staunovo highlighted data from the World Gold Council, indicating that total gold demand in 2025, encompassing over-the-counter (OTC) transactions, is projected to surpass 5,000 metric tonnes for the first time. This surge is largely attributed to robust investment activity.
Key components of this demand include:
- ETF Holdings: A significant rise of 801 metric tons in gold Exchange Traded Fund (ETF) holdings.
- Bar and Coin Purchases: Investment in physical gold bars and coins reached a 12-year high, totalling nearly 1,375 metric tons.
- Central Bank Acquisitions: Central banks added 863 metric tons to their reserves. While this figure was slightly below expectations for the year and fell short of record amounts seen in previous years, it remains historically strong.
Despite elevated prices, which predictably tempered demand for jewellery, sales in this sector were higher than initially projected. Anecdotal evidence suggests that in Australia, some individuals have been cashing in their gold jewellery, such as rings and necklaces, to take advantage of the higher prices.
Record Inflows into Gold ETFs Bolster Confidence
The analysts’ expectations for heightened investment activity in 2026 are further supported by recent monthly inflow data for gold ETFs. The World Gold Council reported a record net monthly inflow of US$19 billion (approximately A$27.3 billion) into gold ETFs globally in January.
On the Australian Securities Exchange (ASX), gold ETFs saw net inflows of US$202 million in the same month. Collectively, gold ETFs now manage a record US$669 billion in assets, with US$8.6 billion of that amount held within ASX-listed gold ETFs.
Gordon and Staunovo anticipate a continuation of these positive trends, expecting:
- Strong ongoing purchases by central banks.
- Sustained higher inflows into gold ETFs.
- Increased demand for gold bars and coins.
These expectations are underpinned by several global economic factors, including:
- Lower US real interest rates.
- Persistent global economic uncertainties.
- Uncertainty surrounding US domestic policy, particularly in the lead-up to the midterm elections and growing fiscal stress.
Potential for Gold Price to Exceed US$7,000?
The UBS strategists also outlined potential scenarios that could see the gold price climb even higher. Under favourable circumstances, they believe the price could reach as high as US$7,200 per ounce. Conversely, they project a downside scenario target of US$4,600 per ounce, which represents a move of approximately one standard deviation.
Factors that could push gold towards the upside scenario include:
- A steep escalation in geopolitical tensions.
Conversely, risks to the downside could be amplified by:
- A hawkish pivot by the US Federal Reserve.
Given these projections, UBS maintains its rating of gold as “Attractive” and continues to hold a long position in its global asset allocation strategy. For investors looking to mitigate potential downside price risks, the firm recommends employing options strategies.
ASX Gold Shares Show Strong Performance
In line with the positive outlook for the precious metal, ASX-listed gold shares have experienced a notable increase. The S&P/ASX All Ords Gold Index (ASX: XGD) was up 4.6% at the time of writing.
Several prominent gold mining companies on the ASX also saw their share prices rise:
- Northern Star Resources Ltd (ASX: NST): Share price up 2.78% to $27.52.
- Evolution Mining Ltd (ASX: EVN): Share price up 3.66% to $14.87.
- Newmont Corporation CDI (ASX: NEM): Shares up 6.3% to $164.56.
- Genesis Minerals Ltd (ASX: GMD): Share price up 3.2% to $6.86.
- Perseus Mining Ltd (ASX: PRU): Shares up 5.1% to $5.61.
