UBS predicts gold price could reach $2,850 in 2025

UBS has remained optimistic about gold’s outlook for 2025, despite facing potential obstacles such as fewer anticipated rate cuts and a stronger U.S. dollar.

The Swiss investment bank believes that gold’s positive performance from 2024 can carry over into the new year, driven primarily by structural economic factors and robust demand from central banks.

Gold saw a substantial increase of 27.6% in 2024, outperforming the S&P 500 and becoming one of its best annual performances in over a decade.

While the Federal Reserve’s hawkish stance in December caused some short-term volatility, UBS analysts remain confident in gold’s potential for further growth.

“We believe gold can build on its 2024 gains. Although U.S. rates may fall less than expected, they are still on track to decline. And the case for holding gold rests on more than rates,” they noted.

UBS forecasts central bank demand to stay strong, with an expected 900 metric tons of gold being purchased in 2025.

This is attributed to continued trends of diversification and dedollarisation among central banks worldwide.

The report also highlighted that increasing U.S. federal deficits and concerns over the nation’s long-term debt profile would further support gold’s attractiveness.

In terms of pricing, UBS revised its gold price forecast for 2025, now projecting it to reach $2,850 per ounce, a $50 decrease from the previous estimate.

Gold was priced at $2,639 per ounce as of last week, suggesting a slower but still positive growth trajectory for the precious metal.

Despite the downward adjustment, UBS’s forecast still indicates significant upside potential.