The bank cites structural de-dollarization and central bank demand as key drivers for gold’s long-term rally.
UBS increased its 12-month gold price target to $5,400 an ounce, citing sustained dollar weakness as a structural trend rather than a short-term fluctuation. The bank expects de-dollarization, driven by central bank reserve diversification and US fiscal concerns, to support gold demand over the medium to long term.
Gold has risen approximately 15% this month, with resumed inflows into gold ETFs and robust central bank purchases, including recent buying by the People’s Bank of China. UBS notes that while near-term factors like Middle East tensions and higher oil prices may provide temporary dollar support, the broader depreciation trend is likely to persist.
The bank favors selective currency exposure, including the pound, Norwegian krone, New Zealand dollar, and yuan, over broad dollar shorts, reflecting a nuanced approach to the de-dollarization trade.