(Kitco News) – Banking giants UBS and ANZ both raised their gold price targets well above the key $3,000 per ounce threshold in the latest sign that financial institutions believe the yellow metal’s rally can run higher as geopolitical conflict and trade wars loom large.
The Chief Investment Office of Swiss banking behemoth UBS said in a report on Monday that “[t]he defensive asset has benefited from geopolitical and trade frictions, and renewed expectations for US rate cuts on growth fears.”
“US Treasury Secretary Scott Bessent in an interview on Sunday characterized current economic pressure as an economic ‘transition,’ but also didn't rule out a recession,” they wrote. “On the geopolitical front, the Trump administration over the weekend escalated military strikes on Houthi forces in Yemen in response to their attacks on international shipping lanes.”
UBS noted that inflows into gold exchange-traded funds (ETFs) have accelerated once again in recent weeks, with the increase driven primarily “by investors seeking defensive assets amid escalating uncertainties, ongoing central bank demand, and uncertainty over the Fed outlook.”
“As risks rise, we lift our target to the level of our previous upside scenario of USD 3,200/oz (up from USD 3,000/oz) across all tenors,” they wrote. “With this move, we reiterate our preference for the metal, and see any pullbacks as an opportunity to build fresh long positions. We also maintain our view that a gold allocation of around 5% in a USD balanced portfolio is optimal from a longer-term diversification standpoint.”
Australia and New Zealand banking conglomerate ANZ also raised its zero-to-three-month gold price forecast to $3,100 per ounce, while its six-month forecast has been upped to $3,200, according to a research note published on Tuesday morning.
“We maintain our bullish view, amid strong tailwinds from escalating geopolitical and trade tensions, easing monetary policy, and strong central bank buying,” the bank said of their position on the yellow metal’s short and medium-term prospects.
“As for the gold market, fear of import tariffs has tightened liquidity in the London spot market, as supply flows to the U.S.,” they noted. “This has triggered arbitrage trades, with a widening spread between Comex futures and London spot.”
ANZ believes the transatlantic flows of precious metal will continue impacting silver prices as well. “We see this supply dislocation taking some time to normalise and keeping silver prices volatile,” the analysts wrote.
The bank expects silver to trade within a range between $34 and $36 per ounce.
Spot gold shot up to a new all-time high of $3,038.35 at the North American market open on Tuesday and continues to trade comfortably above the $3k level.
Spot gold last traded at $3,026.54 for a gain of 0.85% on the daily chart.
Silver prices also caught a bid up to $34.240 in the spot market on Tuesday, and last traded at $33.883 per ounce for a marginal gain of 0.06% on the session.
