Gold surged past the $4,000 per ounce level for the first time on Wednesday, extending its impressive year-to-date rally to more than 50%.
UBS Chief Investment Officer Mark Haefele advised investors to keep a “mid-single-digit percentage allocation to gold,” emphasizing the metal’s role as a reliable hedge against inflation and broader market uncertainty.
UBS expects the rally to continue despite the steep gains already recorded this year and projects prices could climb to $4,200 per ounce in the coming months.
Analysts say the ongoing U.S. government shutdown has added new momentum to the metal’s upward trajectory. At the same time, recent political changes in Japan and France have raised fresh fiscal concerns, increasing the appeal of gold as a safe-haven asset.
Declining U.S. real interest rates — now at their lowest since mid-2022 — have also supported the rally by reducing the opportunity cost of holding gold. The drop reflects market bets on further rate cuts from the Federal Reserve as inflation remains above the 2% target.
Demand for gold continues to show strength across multiple fronts. Exchange-traded fund holdings are approaching record levels, while central bank purchases are expected to reach between 900 and 950 metric tons this year.
Julius Baer has suggested that strong central bank buying could persist for years to come.
“Assuming a target gold allocation of 20% to 25%, in line with the global average, buying should continue for another three to five years according to our analysis,” said Carsten Menke, Head of Next Generation Research at Julius Baer.
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