UBS has raised its gold price forecasts, citing strong structural support and resilient demand for the yellow metal.

The investment bank now expects gold prices to average $2,365 in 2024, up 8% from previous forecasts, with a year-end target of $2,600. Over the next two years, UBS projects gold prices will exceed $2,800, reflecting a robust outlook despite potential long-term easing.

“Our long-term gold price forecast (in real terms) is also lifted by 11% to $1950 from $1750,” UBS noted.

“This implies that although we expect prices to eventually ease over the long run, we now anticipate that after adjusting for inflation, nominal gold prices should hold at considerably higher levels than before at around $2300,” it added.

The upward revision is driven by substantial official sector gold purchases and sustained physical demand, which have “effectively created a level shift higher in gold’s trading range,” UBS strategists said.

This structural shift has anchored investors’ bullish views on gold, supported by macroeconomic uncertainties and persistent geopolitical risks.

Going forward, UBS believes the gold market is entering a seasonally quieter period, but sees this as an opportunity. Specifically, its strategists think that the Northern Hemisphere summer months could bring about dull price action for the bullion, with many market participants going off to holidays.

“We think any setbacks during this period should offer opportunities to build gold positions,” strategists said.

“The second half of 2024 holds a lot of uncertainty, especially given the upcoming US elections. Event risks and the rising concerns about the US fiscal deficit could act as upside catalysts later in the year.”

Moreover, UBS said the upcoming US elections and concerns about the US fiscal deficit could serve as further catalysts for higher gold prices in the second half of 2024.

In addition to gold, UBS has also revised its silver price forecasts. The bank now targets a 2024 year-end price of $36 for silver, with an average of $30.5, reflecting an expected outperformance relative to gold.