UBS Outlines Three Factors It Says Could Support Gold in the Second Half of 2026

UBS strategists said gold's ability to revisit recent highs may depend on three factors: the Federal Reserve refraining from further rate hikes, a recovery in investment demand, and central banks maintaining purchases at around current levels.

Gold traded near $4,077 per ounce on July 30 after several months of softer prices, amid weaker investment and jewelry demand as well as higher mine production.

Demand signals to watch

1. Bar-and-coin demand fell to 307 tons in Q2, down from more than 400 tons in each of the previous two quarters, according to the World Gold Council.
2. ETF investment demand (excluding OTC transactions) declined to 262 tons from 487 tons a year earlier.
3. Central-bank purchases remained comparatively resilient at 289 tons in Q2, with first-half buying totaling around 345 tons, equivalent to an annualized pace of roughly 700 tons.

According to UBS, a sustained recovery in investment inflows together with continued central-bank purchases at around current levels would be important factors if gold is to remain above the $4,000 level.

The Federal Reserve's policy outlook remains another key variable. Markets are currently pricing in the possibility of additional rate hikes this year. UBS said such a scenario could increase the likelihood of near-term downside pressure toward the $3,850 level.

Conversely, UBS said a pause in rate increases followed by policy easing beginning in early 2027 could lower real yields and reduce the opportunity cost of holding non-yielding assets such as gold. The bank added that such an environment may also weigh on the U.S. dollar and support investment demand.

UBS maintains the following price forecasts:

1. September 2026: $4,400
2. December 2026: $4,600
3. March 2027: $5,000
4. June 2027: $5,200

UBS said it continues to view the $3,850 area as an important level to monitor from a longer-term market perspective, while maintaining a cautious stance on the near-term outlook.