UBS analysts say the current pullback in the gold market is only temporary, and gold prices are still expected to reach $4,200 per ounce. If geopolitical or market risks intensify, the upside scenario could push it up to $4,700.



UBS stated in a research report on Monday (November 3rd): "The much-anticipated pullback has come to an end. Apart from technical factors, we see no fundamental reasons for selling."

The Swiss banking giant noted that "weakening price momentum triggered a second wave of declines in futures positions," but emphasized that underlying demand remains strong.

UBS analysts, citing the World Gold Council's third-quarter gold demand trends report, confirmed that central banks and individual investors were "buying very strongly and at an accelerating pace."

The report states, "The central bank purchased 634 metric tons of gold this year, slower than last year, but it accelerated in the fourth quarter, which is in line with our forecast of 900-950 metric tons by 2025."

ETF inflows reached 222 metric tons, and demand for gold coins and bars exceeded 300 metric tons for the fourth consecutive quarter, indicating a strengthening appetite among investors. UBS noted that "jewelry demand was not as weak as expected."

Analysts stated, "We are happy to buy on dips in gold prices," and believe investors are "still under-allocated" to gold. UBS recommends a mid-single-digit percentage (5%–9%) in portfolio allocations for gold.

On October 20, UBS Global Wealth Management strategist Sagar Khandelwal stated that low real interest rates, a weaker dollar, rising government debt, and geopolitical instability could push gold prices to $4,700 per ounce in the first quarter of 2026, with mining stocks expected to outperform.

In his latest report, he wrote: "While the scale and speed of the gold rally may lead to increased volatility, we maintain our view that gold is an important component of a resilient investment strategy."

Khandelwal warned that U.S. real interest rates could fall into negative territory as the Federal Reserve cuts rates while inflation remains sticky.

He stated, "We believe this will further weaken the attractiveness of the US dollar, thereby driving funds into gold bars. In fact, according to the World Gold Council, global gold ETFs recorded their largest monthly inflow in September ($17 billion), bringing the total inflow to $26 billion in the three months ending in September to the strongest quarter on record."

UBS believes investment demand could strengthen further. Khandelwal wrote, "With central bank gold purchases remaining high, we expect global gold demand to reach approximately 4,850 metric tons this year, the highest since 2011. If private investors follow the trend of central banks and diversify their holdings of US Treasuries into gold, spot prices could be pushed even higher."

He stated, "Finally, given the continued economic, geopolitical, and policy uncertainties, we expect funds to continue flowing into gold, driving prices further up toward our upside target of $4,700/oz. Given the low correlation between precious metals and the stock and bond markets, especially during periods of market stress, we prefer to allocate a mid-single-digit percentage of gold to our diversified portfolios."

Khandelwal added, "In addition, investors may also consider selective stock exposure to gold miners, whose cash flow may grow faster than the price of gold in the next six months."

At 11:25 Beijing time, spot gold was trading at $3,991.03 per ounce.