UBS bullish on gold amid global uncertainty

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May 18, 2025 | 12:00am

MANILA, Philippines — Global investment bank UBS has painted a bullish outlook for gold, projecting prices to rally toward $3,500 per ounce by the end of the year, citing a confluence of factors including continued US Federal Reserve policy easing, strong investor demand and rising diversification needs amid ongoing global economic uncertainty.

In a webinar, UBS precious metals strategist Joni Teves said that while volatility stemming from tariff announcements and geopolitical tensions has stirred fluctuations in the gold market, the broader trend remains firmly upward.

“We have a bullish backdrop for gold,” Teves said.

“There’s been a lot of volatility on gold price, but we think that the broader outlook remains the same. Given downside risk to growth, we think that the Fed will continue to ease policy and this creates a positive backdrop for gold,” she said.

Teves pointed out that investors are expected to continue to diversify their assets and gold is an attractive asset for them to diversify into.

Investors also have room to continue adding to gold holdings. Teves noted that despite gold’s strong rally, market positioning remains relatively lean, citing low net long positions on the Commodity Exchange and modest allocations in exchange-traded funds (ETFs), which suggests further accumulation is possible.

She said that metrics such as the value of gold holdings in ETFs relative to total assets under management are still well below previous highs.

According to Teves, the recent technical rally in gold, along with heightened tensions between the US and China, suggest that the market is due for a period of consolidation, especially with the typically quiet summer months approaching in the Northern Hemisphere.

“I think the market has room to consolidate in the near term. This pullback offers a good entry point for investors who’ve been waiting on the sidelines for more attractive levels. Physical buyers... may also take this opportunity to step in,” she said.

US monetary policy also remains central to gold’s outlook.

According to Teves, the two main long-term drivers for gold remain the dollar and US real interest rates. The expectation that the Fed will continue cutting rates in response to slowing growth supports the bank’s bullish stance.

“As long as the Fed is easing policy and macro uncertainty remains high, the outlook for gold remains positive,” Teves said. However, she warned that a shift in Fed policy could present a downside risk.

“If the Fed turns more hawkish, especially in a scenario where inflation becomes the primary concern despite elevated tariffs, that would change the narrative for gold,” Teves said.

On gold demand from the Philippines and broader Asia-Pacific, UBS sees continued strength in physical investment despite high prices weighing on jewelry demand.