UBS has raised its forecast for gold prices, projecting the precious metal to reach $2,600 per ounce by the end of 2024, up from the previous target of $2,500 per ounce. 

The new forecast comes after gold hit a record high of $2,450 per ounce on May 20, driven by increased expectations for Federal Reserve rate cuts and a weakening US dollar amidst softer US economic data.

The revised forecast reflects three key factors. First, UBS states that softer US data in April led to a repricing of Federal Reserve rate cut expectations, with money markets now pricing in 40 basis points of easing in 2024, up from 28 basis points at the end of April. 

Lower rates typically boost gold prices by driving exchange-traded fund (ETF) inflows.

Second, UBS has increased its central bank demand forecast for 2024 to 950–1,000 metric tons, up from 800–850 metric tons. They note that the World Gold Council reported record first-quarter purchases of 290 metric tons, despite recent moderation in gold purchases by the People’s Bank of China. Swiss trade data, however, indicates continued strong buying in China.

Third, ongoing geopolitical uncertainties, including the approaching US election, conflicts in the Middle East and Ukraine, and heightened US-China trade tensions, are expected to support gold as a hedge. 

UBS recommends buying gold on dips around $2,300 per ounce or below, emphasizing its role as a long-term portfolio diversifier. 

Looking further ahead, UBS also introduced an end-June 2025 forecast of $2,700 per ounce.