Gold’s pullback has prompted investors to question whether the metal still deserves its reputation as a safe-haven asset, but UBS said in a note Tuesday that the core thesis remains firmly intact.

The yellow metal has declined from a high of over $5,400 in early March to just above $5,000 today after briefly moving below the key level in Monday’s session.

UBS strategist Joni Teves wrote that the short answer to whether gold remains a safe haven is yes, arguing that its role as a diversifier remains intact despite recent volatility. 

According to UBS, “the factors that have underpinned gold’s bull run are still in place,” with rising investor allocations expected to drive “new record highs this year.”

Teves acknowledged that the current environment has clouded the near-term picture. 

“Higher real rates and a stronger dollar are acting as a headwind,” she said, adding that markets have been focused on the inflation implications of higher oil prices and what that means for Federal Reserve policy. 

But she noted that this is “only one piece of the puzzle,” and that weaker growth triggering fiscal or monetary stimulus “presents upside risks for gold.”

Geopolitical tensions also continue to support long-term demand. Teves stated that the persistence of global uncertainty “underpins strategic demand for gold as investors seek to hold more diversified portfolios.” 

She reiterated that UBS sees any pullbacks as opportunities to build positions, maintaining the view that gold should reach new highs this year.

The bank added that the broader precious metals complex remains stable, noting that silver, platinum and palladium have “held reasonably well” despite risks to industrial demand.