Gold Prices Supported by Geopolitical and Monetary Factors
UBS recently reiterated its bullish outlook on gold, forecasting that international gold prices could exceed $6,200 per ounce in the coming months amid complex global tensions and accommodative monetary conditions. Analysts noted that rising geopolitical risks, particularly between the U.S. and Iran, are becoming key catalysts for increased gold demand.
Rate Cuts Weigh on Real Interest Rates
At the same time, the Federal Reserve's ongoing easing cycle is further reducing real interest rates, making gold — a non-yielding asset — more attractive. Markets broadly expect rates to remain low over the long term, providing strong support for higher gold prices.
Demand Surge Meets Supply Constraints
On the demand side, global gold consumption is expected to surpass 5,000 tons by 2025. UBS highlighted that continuous inflows of investment capital into gold markets, alongside growing central bank purchases, will be key drivers of price increases.
- Investment Demand: Risk-averse investors are increasing allocations to gold ETFs and physical bullion
- Central Bank Buying: Emerging economies are accelerating diversification of their foreign reserves
Supply Growth Limited in the Near Term
On the supply side, despite higher prices potentially stimulating new exploration, near-term production growth remains constrained. According to Wood Mackenzie, around 80 major gold mines are expected to complete their current production plans by 2028, facing resource depletion and operational challenges that will limit overall output growth.
In conclusion, the gold market is currently in a favorable environment of improving supply-demand dynamics, suggesting further upside potential for prices in the near future.