Swiss banking giant UBS released a new research report, lowering its year-end 2026 gold spot price target from $5,900 per ounce to $5,500. The core reason for this downward revision is that persistently high US Treasury yields and a continuously strengthening US dollar are two negative factors that may hinder gold price increases in the long term.

UBS analysts Dominic Schneider and Wayne Gordon explained that investors are gradually withdrawing from gold assets in a high-yield environment.

"The market is starting to focus on the opportunity cost of investment again. With real interest rates remaining high and gold itself not generating interest income, this characteristic has once again become a key factor for investors when allocating gold," the two analysts wrote in their research report.

In addition, market demand for gold ETFs and futures products has shrunk significantly. Although recent capital flows have stabilized slightly, the current market enthusiasm is insufficient for gold to replicate the strong upward trend seen in the first half of 2026. However, UBS is not bearish on the overall long-term bullish trend for gold, but rather reminds investors to remain patient in the face of multiple current headwinds. Even with the downward revision of its forecast, the institution still believes that gold prices will still be $1,000 higher than current levels by the end of the year.

Geopolitical conflicts present both advantages and disadvantages, and commodities as a whole have the potential to rise.

Regarding the market outlook, analysts say that global monetary policy is expected to return to neutral in 2027, at which time the strong momentum of the US dollar may slow down, and the investment appeal of gold will also rebound.



Back on April 13th, UBS commodities analyst Giovanni Stanovo stated that even if the conflict with Iran ended, commodities such as gold and crude oil still had significant room for price increases. He also suggested that investors heavily invested in gold should diversify their asset allocation across commodities.

Stenovo provided an in-depth analysis of the impact of the Middle East situation on the commodity market. He pointed out that the escalating geopolitical tensions with Iran and the rising shipping risks in the Strait of Hormuz have not only driven up the prices of commodities such as crude oil but also exacerbated volatility in the commodity market. "The imbalance between supply and demand, coupled with overlapping geopolitical risks, will continue to provide upward support for commodity prices. Actively diversifying commodity assets can help investors hedge against inflation risks and energy supply shocks."

Data shows that before the military strikes against Iran, Brent crude oil was priced at approximately $72 per barrel; after the conflict broke out, oil prices surged to $102 per barrel. In contrast, gold, dragged down by rising market expectations of interest rate hikes, is currently nearly 13% lower than its all-time closing high in January of this year, indicating that its safe-haven appeal has not been fully realized. Looking at overall commodity categories, based on statistics from the UBS CMCI Commodity Composite Total Return Index, commodities have risen by 17% overall this year.

Stanovo added that while the risk premium from geopolitical conflicts will gradually subside, the fundamentals of commodities remain favorable. Currently, refined oil inventories in many countries are low, and before inventories are replenished, the market may use price increases to suppress consumer demand. In the medium to long term, if global geopolitical uncertainty remains high and market expectations for interest rate cuts materialize, gold prices are still expected to see a significant rebound. Meanwhile, copper and aluminum, two industrial metals, face persistent supply shortages, coupled with long-term demand support from the electrification industry, providing a basis for medium- to long-term price increases.

Short-term pressure but long-term positive outlook: Institutions offer gold allocation strategies.

In fact, UBS has adjusted its gold price forecast multiple times this year. On March 16, the institution predicted, based on changes in market risk, monetary policy trends, inflation levels, and underlying consumer demand, that gold prices could reach $6,200 per ounce by the end of 2026.

Analysts, in reviewing the market, noted that since the outbreak of the current conflict with Iran, gold prices have consistently failed to break through the $5,200/ounce mark, indicating a complete failure of safe-haven buying. This contrasts sharply with last year's market performance. Last year, gold surged by 65%, fueled by a confluence of factors including geopolitical crises, declining real interest rates, and debt crises in multiple countries. The current market trend mirrors previous geopolitical conflicts: in the early stages of a crisis, investors prioritize highly liquid energy assets, marginalizing the safe-haven demand for gold.

The team also cited past cases to support their point: In the early stages of the Russia-Ukraine conflict in 2022, gold prices surged by 15%, but subsequently, as the Federal Reserve began its interest rate hike cycle, gold prices fell by 15% to 18%. The same logic applies to the Gulf War and the Iraq War, during which gold prices initially rose by 17% and 19% respectively, but ultimately declined as the situation eased and monetary policy tightened.

Even with short-term market volatility, UBS remains optimistic, believing that gold prices still have over 20% upside potential in 2026, with a target range of $5,900 to $6,200 per ounce. Analysts emphasize that gold's core value is not in mitigating short-term wartime risks, but rather in hedging against various currency risks arising from geopolitical conflicts, including currency devaluation, widening fiscal deficits, and slowing economic growth.

The institution objectively analyzed the short-term negative factors: geopolitical conflicts are pushing up energy prices and exacerbating inflation anxiety, forcing a stronger dollar. Meanwhile, rising market expectations for interest rate hikes are exerting double pressure, directly suppressing gold prices. However, the institution predicts that central banks will not blindly and aggressively raise interest rates, and inflation control will maintain a steady pace. Furthermore, the longer the US-Iran conflict remains deadlocked, the higher the risk of a global economic downturn, which will conversely boost demand for gold as a safe-haven hedging asset in the medium to long term.

From the perspective of underlying demand and long-term logic, the foundation for gold's rise is very solid. On the one hand, while gold ETF investors slightly reduced their positions in the first half of this month, recent holdings have stabilized, and hedge funds have also slightly increased their net long positions in gold. Continued gold purchases by central banks worldwide and rising incomes in Asian countries driving jewelry consumption will comprehensively support overall gold demand. On the other hand, the high level of global government debt, the gradual reduction of reliance on dollar assets by central banks and investors, and the promotion of asset diversification—this long-term structural trend will continue to empower the gold market.

For ordinary investors, UBS offers clear allocation advice: Investors with a risk appetite for gold can moderately allocate gold to their diversified portfolios, with the allocation ratio recommended to be controlled in the middle single-digit range; investors who have already heavily invested in gold and have substantial profits can add commodities such as copper, aluminum, and agricultural products to diversify investment income sources and optimize their asset structure.