In a striking economic forecast that has captured the attention of global markets, Swiss bank UBS predicted a strong upward trend for gold, forecasting that prices could reach unprecedented record highs of $6,200 per ounce in the coming months. This report is driven by the continued strength of the key factors that fueled gold's robust gains last year, indicating a fundamental shift in the global investment landscape.
The return of trade uncertainty and tariffs
The Swiss bank indicated in its report that the primary driver of this anticipated rise is the strong return of "trade uncertainty" to the economic landscape. This concern is directly linked to the expected economic policies following US President Donald Trump's imposition of a 15% global tariff. This protectionist measure is likely to reshape global supply chains and increase import costs, creating a fertile ground for inflation.
Historically, gold has been the biggest beneficiary during periods of geopolitical tension and trade wars. When traditional financial markets are disrupted or confidence in paper currencies is shaken by sudden political decisions, investors and central banks turn to gold as a "safe haven" that preserves value. This explains the expected surge in buying activity as geopolitical tensions escalate in response to the new US decisions.
The impact of Federal Reserve decisions and interest rates
On the other side of the equation, the Federal Reserve (the US central bank) plays a crucial role in reinforcing these expectations. Analysts at UBS anticipate the Fed will move toward easing monetary policy by cutting interest rates twice, by 25 basis points each, before the end of September.
Lower interest rates are a traditional driver of rising gold prices because gold is an asset that does not generate periodic returns (like coupons on bonds or dividends on stocks). Therefore, lower interest rates reduce the "opportunity cost" of holding the precious metal, making it more attractive to investment portfolios compared to government bonds and treasury bills, whose yields will decline.
Economic importance and historical context
These projections are particularly significant given the historical context of gold's movements. Since the dollar was decoupled from gold in the 1970s, the metal has experienced major upward cycles that have consistently coincided with major economic crises or periods of hyperinflation. Reaching $6,200 per ounce would represent a significant leap that would reassess global assets and could lead to increased efforts by central banks worldwide to diversify their reserves away from the dollar, thus reinforcing gold's status as a strategic reserve asset.
In conclusion, the UBS report, as reported by Western media outlets, indicates that the combination of strict trade policies (tariffs) and accommodative monetary policies (interest rate cuts) creates a “perfect storm” that drives investors towards real assets, primarily gold, to hedge against the volatility of the next phase.
