UBS forecasts gold to $3,500/oz

Key Takeaways:

• UBS predicts gold prices will reach $3,500 per ounce by end of 2025.
• Market reactions to Middle East tensions are overblown, according to UBS.
• Iran accounts for just 1.6% of global oil output.
• Investors are advised to buy on dips amid market pullbacks.
• Bullish outlook on defense and technology sectors.

Gold’s Gleam Expected to Intensify by 2025, Says UBS

Introduction

UBS foresees a glittering future for gold, forecasting prices to surge to $3,500 per ounce by the end of 2025. This optimistic projection is rooted in an anticipated increase in demand for strategic investments and assets that hedge against inflation. The bank’s outlook presents a beacon for investors amid current market uncertainties.

Geopolitical Tensions Overblown

Challenging prevailing market sentiments, UBS believes that the recent sharp reaction to Middle East tensions is disproportionate to the actual risks involved. “UBS believes the sharp market reaction to the latest Middle East crisis is overdone,” the bank asserts. By downplaying these fears, UBS suggests that the geopolitical risk premium has been inflated beyond reasonable levels.

Iran’s Minimal Impact on Oil Supply

Central to UBS’s argument is the fact that Iran contributes merely a fraction to the global oil supply. “Iran accounts for just 1.6% of global output,” the bank notes, implying that disruptions may not have the severe global repercussions that markets fear. This perspective positions the current tensions as unlikely to induce lasting market upheaval.

Investment Strategy – Buying on Dips

In light of its analysis, UBS advises investors to adopt a proactive approach during periods of market volatility. “It advises investors to buy on dips, viewing any pullback as a buying opportunity rather than the start of a sustained downturn,” the bank recommends. This strategy underscores a confidence in the market’s underlying strength and resilience.

Bullish on Defense and Technology Sectors

UBS maintains a bullish stance on global equities, with particular enthusiasm for the defense and technology sectors. “The bank maintains a bullish outlook on global equities, particularly in sectors such as defense and technology,” it states. These sectors are poised to benefit from both heightened geopolitical focus and advancements in innovation.

Gold’s Rising Demand

The forecasted ascent of gold prices is attributed to a burgeoning demand for assets that serve strategic purposes and offer protection against inflation. As investors seek stability in uncertain times, gold’s allure as a safe-haven asset is amplified. UBS’s prediction signals confidence in this enduring trend.

Market Underpinnings: Policy and Innovation

Beyond immediate market movements, UBS points to foundational factors that support a positive outlook. “UBS expects markets to remain underpinned by supportive policy, resilient wages, and AI-led productivity gains,” the bank explains. These elements are seen as critical in sustaining economic growth and fostering an environment conducive to investment.

Conclusion

UBS’s insights offer a counter-narrative to prevailing market apprehensions, presenting a case for optimism grounded in strategic analysis. By highlighting opportunities in gold and select equity sectors, the bank provides investors with a roadmap for navigating the complexities of the current financial landscape. As the forecast suggests, those willing to embrace calculated risks may find considerable rewards by 2025.