UBS strategists believe gold prices could climb as high as $4,700 an ounce, supported by rising political and financial market risks that continue to drive safe-haven demand — even as the likely resolution of the U.S. government shutdown improves investor sentiment.
According to the bank, the recent pause in gold’s rally is only temporary.
“We think gold prices can climb further, even if the potential end to the longest government shutdown in U.S. history supports risk sentiment,” strategists led by Ulrike Hoffmann-Burchardi said in a note.
Political uncertainty remains a key factor behind gold’s resilience. UBS analysts pointed to ongoing questions over the timing of the Senate vote on the U.S. spending bill and warned that another partial shutdown could occur early next year if Congress fails to reach a longer-term agreement.
The bank also highlighted legal uncertainty surrounding the Supreme Court’s pending decision on tariffs imposed under the International Emergency Economic Powers Act (IEEPA), noting that this ruling should “provide ongoing support for gold.”
UBS further emphasized that elevated government debt levels worldwide are fueling concerns over fiscal sustainability and potential currency depreciation, boosting demand for bullion. Data from the World Gold Council showed that global gold demand hit a record high in the September quarter, driven by investment inflows and strong central bank purchases. UBS expects 2025 demand to be the highest since 2011.
On the monetary side, strategists anticipate that two additional Federal Reserve rate cuts by early 2026 could further strengthen gold’s outlook, as labor market data weaken and consumer sentiment continues to slide.
“With U.S. real interest rates likely to fall further and undermine the appeal of the US dollar, we expect gold to stay supported,” they wrote.
UBS maintained a 12-month gold price target of $4,200 per ounce but added that a “significant rise in political and financial market risks could push gold toward our upside target of $4,700/oz.”
Overall, the bank remains bullish on the yellow metal, describing it as “an effective portfolio diversifier and hedge.”