GOLD LIKELY TO KEEP RALLYING UNTIL NEXT YEAR AMID GLOBAL UNCERTAINTIES -- UBS

KUALA LUMPUR, May 15 (Bernama) -- UBS Investment Bank remains bullish on gold and expects the precious metal to continue to rally, likely until the second or third quarter of next year, amid global uncertainties. 

Its precious metals strategist, Joni Teves, said that although the tariff announcements led to high volatility in many asset classes, including gold, the broader outlook for gold remained the same. 

“Given the downside risks to growth, we think the United States Federal Reserve (Fed) will continue to ease its policy, thus creating a positive backdrop for gold. 

“Investors should continue to diversify their assets, especially in gold, since it is an attractive safe-haven asset, as the longer-term themes of reallocations of assets, de-dollarisation are all supportive for gold,” she told the media during a virtual interview today. 

Despite gold’s ongoing rally, Teves said there is still room for investors to add to their gold holdings, as net long positions in Comex gold futures were relatively low in the first quarter of 2025 (1Q 2025).

She said this was because gold was under pressure when the Fed was hiking interest rates, and many gold positions were cut down due to the monetary policy stance. 

In the near term, Teves said there is room for the market to consolidate and provide opportunities for investors sitting on the sidelines waiting for better levels to get in.

“For physical investors, gold has picked up across various regions during the 1Q 2025, and we think this will continue for the remainder of this year. 

“Our year-end outlook for the gold price is to reach US$3,500 per ounce for this year and next year. However, the rally could start to taper off and ease from the middle or 3Q of next year onwards,” she said. 

Meanwhile, comparing gold and cryptocurrencies, Teves noted that in the midst of headlines of geopolitical risk escalation, gold would continue to stand out as the preferred safe haven compared with cryptocurrencies, which are more of a risk asset. 

“Overall, we think that the macro backdrop is supportive for gold to continue to rally into next year.

“We expect demand to come from various segments in the market, the official sector to continue to be net buyers, and there will be continued build in investor allocations across private wealth, long-term asset managers, funds and retail investors,” she said.

Teves also said that the demand for jewellery would remain under pressure because of the higher gold prices, but physical investment demand should help offset some of these weaknesses.

“On the upside risks, we see upside risks out of China, given very strong bullish sentiment onshore and the volumes we’ve seen so far this year. 

“Downside risks to gold would be a much more benign tariff environment and the Fed turning more hawkish,” she added. 

-- BERNAMA