(Kitco News) – Gold is one of the best places for investors to be following the Trump administration’s recent tariff announcements against the European Union and other major trading partners, according to the latest reports from banking giants Morgan Stanley, Goldman Sachs, and UBS.
In their latest report on the metals market, analysts at Morgan Stanley wrote that further weakening of the U.S. dollar should provide a tailwind for commodities, while any increase in U.S. inflation rates could also attract inflows into precious metals, and any stimulus policies from China would be an unexpected bullish factor for the sector. U.S. tariffs will pose growth risks to these forecasts, however, as the effects of metals stockpiling gradually fade.
In this environment, Morgan Stanley favors investment in gold, silver, and COMEX copper futures.
The analysts said they expect tariffs on several countries to be raised again starting August 1, and tariffs on industries such as steel, aluminum, and copper will likely raise input cost inflation in the industrial sector. They added that export numbers continue to support Chinese metal demand, but this may weaken as the temporary tariff suspensions end.
Morgan Stanley believes that the current trends in the metal market this year will continue, with upside potential for COMEX copper, gold, and silver, but they expect platinum prices to stabilize after their roughly 50% rise.
The bank has raised its Q4 target price for gold to $3,800 per ounce, supported by central bank and investment demand, a weaker dollar, ETF inflows, and ongoing geopolitical and macroeconomic uncertainty. They also believe gold jewelry demand may recover as consumers adapt to higher prices.
Morgan Stanley forecasts gold prices averaging $3,500 per ounce in Q3 and $3,800 in Q4 2025, and $3,500 per ounce in Q1 2026. They also expect gold to average $3,313 per ounce in 2026 before dropping to $2,625 per ounce in 2027 and $2,500 per ounce in 2028.
The bank cautioned, however, that many uncertainties remain, including the final levels of U.S. tariffs on specific countries and metals, the outcome of the U.S. Section 232 investigation into critical minerals, and whether China will introduce more stimulus measures.
Goldman Sachs also reaffirmed their forecast for gold to reach $3,700 per ounce by year-end before rising to $4,000 by mid-2026, with central bank and ETF inflows supporting lofty prices – along with major off-balance sheet buying.
The investment bank wrote that the clearing of speculative positions has created space for structural buying, adding that inflows into gold ETFs and strong purchases by central banks are emerging as a new pillar of demand.
According to Goldman Sachs' real-time monitoring model, demand for the yellow metal from central banks and other non-U.S. institutions in the London over-the-counter market reached 31 tons in May – far exceeding the monthly average of 17 tons prior to 2022.
The bank’s demand monitoring model indicates that central banks bought 77 tons of gold so far this year, slightly lower than the bank's initial forecast of 80 tons in H1 2026. Goldman Sachs also reiterated its recommendation to go long gold, adding that the continued strength of some markets' off-balance sheet gold purchases is providing support for global gold prices.
And Swiss banking giant UBS said that while they believe the recent White House tariff escalation is a negotiation tactic and the numbers will eventually come back down, they still recommend buying gold as a hedge against policy risk.
In their latest report, analysts at UBS Wealth Management wrote that their base case sees U.S. effective tariff rates settling near 15% - less than half of the 30% to 35% rates announced in recent days – which will support continued gains in the S&P 500.
They added that a new U.S.-EU trade deal is likely before August 1, and barring that, the deadline will be extended. UBS expects no retaliatory tariff announcements from Mexico.
