UBS Wealth Management's Chief Investment Office (CIO) has released a report stating that the upward trend in gold prices remains supported by multiple factors. The firm projects the precious metal could reach $5,000 per ounce by the first half of 2027, with a specific target of $5,200 per ounce by the end of June 2027. If gold prices pull back below $4,000 per ounce in the near term, investors may consider it a potential window for strategic gold allocation.

Data from Wind shows that spot gold has repeatedly broken through the $4,400 per ounce level in recent trading sessions. Last week, gold prices surged 7.4%, marking the strongest single-week performance since January. UBS analysts attribute the recent rally to buying from Chinese institutional investors and inflows into gold ETFs. Other supportive factors include a cooling of expectations regarding the US interest rate path and renewed confirmation of continued central bank purchases.

The People's Bank of China reported that it added nearly 20 tonnes of gold in July, the largest monthly increase since the end of 2023. Meanwhile, recent coordinated intervention by the US and Japan in the foreign exchange market to stabilize the yen could also help mitigate the risk of large-scale selling in US Treasuries.

UBS noted that, in the short term, gold could face volatility if US economic data remains strong and oil-driven inflation concerns intensify, potentially leading the market to further raise its expectations for the Federal Reserve's rate path. Despite a potentially turbulent short-term environment, UBS believes the medium-to-long-term logic supporting gold remains unchanged. This includes a likely decline in real interest rates, a weaker US dollar, continued demand for reserve diversification, and robust central bank purchasing.

The firm pointed out that a decline in real interest rates is expected to revive investment demand. As a non-yielding asset, higher real interest rates increase the opportunity cost of holding gold. UBS expects the Fed to keep rates unchanged this year, with inflation gradually easing, and to potentially restart its easing cycle in 2027. Lower policy rate expectations typically reduce real yields and weaken the US dollar, providing support for gold investment demand.

A weaker dollar and de-dollarization capital flows will remain important medium-term drivers. UBS noted that while the dollar may show resilience in the short term, structural issues such as the large US fiscal deficit and current account deficit, combined with already high investor allocations to US dollar assets, suggest the greenback could weaken in the future. Historical experience shows that a weaker dollar tends to benefit gold, while growing attention to the de-dollarization trend is also expected to support gold's performance.

Central bank purchases continue to provide a solid floor for the gold market. UBS stated that even if private investment demand is relatively subdued, central bank buying remains a crucial support. The firm expects global central bank gold purchases to remain elevated, driven by the long-term trend of de-dollarization. After central banks purchased 289 tonnes of gold in the second quarter, UBS still projects annual purchases of 750 to 1,000 tonnes. While this demand alone may not be sufficient to push gold prices significantly higher, it helps stabilize the market and offset headwinds such as weak jewelry demand.

Therefore, UBS advises investors to separate short-term trading risks from long-term allocation logic. From a strategic allocation perspective, a pullback in gold prices to $4,000 per ounce or below could offer an attractive entry point. For investors preferring physical assets, allocating a mid-single-digit percentage of a well-diversified portfolio to gold could be considered. Additionally, allocating to broad commodities may further enhance portfolio diversification.

According to the South China Morning Post, the London Bullion Market Association (LBMA) released a mid-year survey on Tuesday, indicating that analysts have lowered their 2026 gold price forecasts compared to six months ago. In January, gold prices briefly hit a record high above $5,600 per ounce. However, the survey also noted that gold prices could still rise up to 18% from recent trading levels by the end of this year. The survey, conducted in July, polled 16 analysts, with the highest year-end gold price forecast at $5,100 per ounce. The average year-end price expectation from the survey was $4,500 per ounce. Compared to the optimism at the start of the year, recent market expectations have fallen significantly. In the LBMA's January survey, supported by expectations of a conflict with Iran and central bank purchases, some analysts had forecast gold prices to break above $7,000 per ounce.