Gold's on Fire! UBS Stokes the Flames with $3,200 Target
UBS raises its gold price target to $3,200 per ounce, citing escalating trade tensions, strong central bank demand, and a weakening U.S. economy as key drivers for the precious metal’s continued rally.
Editorial Team (ET)May 8, 2025
UBS Group has raised its gold price forecast to $3,200 per ounce, citing strong safe-haven demand as global trade tensions escalate. The Swiss banking giant believes this milestone could be reached as early as June, a bold prediction that underscores the relentless rally in bullion prices. This latest revision follows gold’s unexpected surge past $3,000 an ounce, a threshold that many analysts thought would take longer to break.
In a research note released Monday, UBS analysts emphasized gold’s critical role in uncertain times, calling it the ultimate store of value amid market volatility. Investors have turned to bullion as a hedge against a worsening global economic outlook, exacerbated by trade wars, geopolitical risks, and shifting monetary policies.
Trade Conflicts and Central Bank Buying Fuel Gold’s Climb
A significant driver behind gold’s upward momentum is US President Donald Trump’s proposed tariffs, which are expected to take effect next month. The administration plans to impose broad reciprocal tariffs alongside sector-specific levies, a move that could send shockwaves through global trade. This heightened uncertainty is expected to push investors further into safe-haven assets like gold, reinforcing its status as a hedge against economic instability.
UBS also highlighted a surge in central bank gold purchases, projecting that global reserves could once again surpass 1,000 tonnes by year-end. With institutions bolstering their bullion holdings, the metal’s long-term outlook remains exceptionally strong. Meanwhile, exchange-traded funds (ETFs) backed by gold have seen a surge in inflows, further reinforcing demand and tightening supply.
Federal Reserve Policy and the Economic Outlook
Another crucial factor in UBS’s forecast is the Federal Reserve’s evolving stance on interest rates. With traders now expecting additional rate cuts due to rising recession concerns, the appeal of non-yielding assets like gold continues to strengthen. Lower interest rates reduce the opportunity cost of holding gold, making it an even more attractive investment as economic conditions deteriorate.
The broader economic landscape in the United States is also playing a pivotal role in gold’s rally. As economic indicators point toward a slowdown, investors are increasingly shifting toward assets that offer stability. UBS sees this trend persisting, with gold benefiting from growing concerns over inflation, currency fluctuations, and overall market fragility.
Other Banks Raise Their Gold Forecasts
UBS is not alone in its bullish outlook. Macquarie Group recently projected gold prices could reach $3,500 an ounce in the second quarter of 2025, while Goldman Sachs revised its target to $3,100 an ounce. These upward revisions reflect a broader consensus that gold’s trajectory is far from over.
The metal’s performance has outpaced expectations, shattering previous resistance levels and defying bearish forecasts. With macroeconomic risks mounting, many experts believe gold’s ascent is just beginning.
Conclusion
The UBS Group’s decision to raise its gold price target to $3,200 signals a broader shift in sentiment toward the precious metal. As trade tensions, central bank policies, and economic uncertainty continue to dominate the financial landscape, gold is cementing its place as the preferred asset for investors seeking stability. With other major banks also adjusting their forecasts, all signs point to an extended bull run for gold in 2025.
