①UBS Group believes the pullback in gold prices is temporary and maintains its year-end target price for gold at $4,200 per ounce. If geopolitical or market risks intensify, gold prices could even rise to $4,700 per ounce within the year. ②UBS advises investors to allocate a mid-single-digit percentage (approximately 4%-6%) of gold in a diversified US dollar investment portfolio.
Last week, $XAU/USD (XAUUSD.CFD)$ After reaching a record high, gold prices experienced a sharp pullback last week, briefly falling below $3,950 per ounce mid-week. However, prices rebounded somewhat and closed at $4,002 per ounce on Friday, representing a 0.94% decline from the previous trading day.
Despite the noticeable pullback in gold prices, most Wall Street firms remain optimistic about the outlook for gold. Recently, UBS Group stated that they consider this pullback in gold prices to be temporary and reaffirmed their target price of $4,200 per ounce by year-end.
They also noted that if geopolitical or market risks escalate, gold prices could potentially reach $4,700 per ounce within the year.
UBS Group stated that this pullback in gold prices was anticipated, and this wave of correction has “temporarily halted.”
“Aside from technical factors, we have not identified any substantial cause for this sell-off,” UBS pointed out. “The weakening momentum in price gains triggered a second round of declines in the number of open interest contracts in futures,” while emphasizing that underlying demand for gold remains strong.
Gold Demand Remains Strong
UBS Group cited the World Gold Council’s recently released 'Q3 Gold Demand Trends Report,' which confirmed that “purchases by global central banks and investors were both very robust and showed accelerating growth trends.”
The World Gold Council's report shows that global gold demand in Q3 increased by 3% year-over-year to 1,313 tons, setting a new quarterly record high.
UBS stated, “Central bank gold purchases totaled 634 tons as of the end of Q3 this year, slightly lower than last year’s levels but have already rebounded in Q4, consistent with our forecast of 900 to 950 metric tons for the full year 2025.”
Moreover, investor interest in gold has also increased. UBS Group noted that inflows into gold ETFs reached 222 tons in the third quarter, while demand for gold bars and coins exceeded 300 tons for the fourth consecutive quarter.
"Jewelry demand was not as weak as feared," UBS Group pointed out.
"We like buying when the gold price falls," UBS Group stated, adding that investors "remain underweight in their allocation to gold." UBS recommends a mid-single-digit allocation to gold (approximately 4%-6%) within a diversified dollar portfolio.
Editor/Doris
