Gold Price Forecast Remains Bullish Into Year End: The Latest

Gold prices were on the watchlist of many over the past year, as the metal grew at a breakneck pace. With the rally having stalled over the past few months, there are some who have lost faith in the trade, yet not all analysts share the same view.

Investment bank UBS has reaffirmed its bullish stance on gold despite the precious metal trading sharply below its January high, citing temporary headwinds that mask stronger structural support from central bank buying and fiscal concerns. Gold is trading near $4,460 per ounce, ~20% below the all-time high near $5,600 reached early this year. The pullback follows a spectacular 64% rally through 2025, with the metal consolidating after a parabolic move.

UBS commodities strategists have targeted US$5,500/oz by year-end, implying around 23% upside.

The recent weakness in gold prices sis seen as coming from a mix of near-term factors that UBS characterises as temporary rather than structural.

Higher energy prices linked to Middle East geopolitical tensions have supported the US dollar and lifted real yields, creating headwinds for non-yielding assets like gold. Meanwhile, resilient US economic data has pushed back market expectations for Federal Reserve rate cuts, keeping two-year Treasury yields elevated and restoring the traditional negative correlation between front-end rates and gold prices to around -0.6 after a brief period of positive correlation earlier in the year.

Despite these pressures, the fundamental backdrop for gold remains robust. World Gold Council data for the first quarter of 2026 showed total demand reaching approximately 1,231 tonnes, up 2% year-over-year and a record $193 billion in value terms due to higher prices. Central bank purchases totalled 244 tonnes in Q1, up 17% from the previous quarter, with Poland, Uzbekistan, and China leading the buying. Full-year central bank demand is projected to reach 700 to 750 tonnes or more, maintaining the elevated pace of reserve diversification that has characterised the market since 2022.

Investment demand showed a split picture, with strong bar and coin buying in Turkey and parts of Asia offsetting outflows from Western gold exchange-traded funds. The divergence underscores the geographic shift in gold demand, with emerging markets and official sector buyers providing a structural floor even as tactical investors in developed markets reduce exposure.

UBS frames its bullish case around an expected shift in monetary policy and currency dynamics in the second half of 2026. The bank anticipates that slowing US growth will eventually prompt the Federal Reserve to resume rate cuts, putting downward pressure on real yields and the dollar, both traditionally supportive for gold. The investment bank also emphasises gold’s role as a hedge against political uncertainty and fiscal deterioration, with rising government debt loads in the US and Europe creating long-term inflation concerns that favour hard assets.

The divergence between short-term bearish positioning and medium-term structural support creates a market caught between the bulls and bears. Commodity trading is never easy at the best of times, but in amidst a backdrop of geopolitical volatility and inflation, there is plenty of whipsaw.

Gold’s ability to reclaim $5,000 and push toward UBS’s targets will depend heavily on whether the anticipated Fed pivot materialises and whether geopolitical and fiscal concerns intensify enough to override the opportunity cost of holding a non-yielding asset in a higher-for-longer rate environment. For now, gold appears to be consolidating gains from an extraordinary 2025 rally while markets await clearer signals on the direction from here. A move towards UBS’ gold forecast into year end would be a strong positive for ASX gold miners, yet with the rate pathway far from certain, there will a few hurdles to overcome as we approach the second half of the year.