UBS Adjusts Gold Price Target to $2,800 by 2025
UBS has once again adjusted its price target for gold, now forecasting a bullish trend in the coming years. The bank anticipates gold to reach $2,800 per ounce by the end of 2025. This update comes amidst macroeconomic uncertainty and geopolitical risks, leading to increased allocations to gold.
Insight: Factors Contributing to Gold Price Increase
UBS analysts noted a structural shift in the market, pointing to strong official sector gold purchases and resilient physical demand as drivers creating a level shift higher in gold’s trading range. The bank highlighted softer U.S. economic data, ongoing geopolitical uncertainties, and expectations for Federal Reserve rate cuts as key factors influencing the anticipated rise in gold prices.
Investor Interest in Gold
UBS also predicts an increase in investors’ gold allocations, particularly among private wealth communities and long-term investors. They suggest that consensus upgrades to add gold or increase gold allocations could potentially trigger the next leg higher for the precious metal.
Insight: Potential Surge in M&A Activity in Gold Mining Sector
Apart from the price of gold itself, UBS sees value in the gold mining sector due to strong balance sheets, high free cash flow yields, and aging assets across many companies. They anticipate a surge in merger and acquisition (M&A) activity as companies seek to replenish pipelines and explore project consolidation, leading to a more efficient and productive industry.
Stock Upgrades and Silver Forecast
UBS has raised target prices for several gold miners, including Northern Star, Genesis Minerals, and SSR Mining. Additionally, the bank has increased its price forecast for silver, driven by rising industrial demand and potential undersupply. The Silver Institute expects total industrial demand to rise, particularly in the photovoltaic sector, amidst temporary mine shutdowns contributing to the metal’s price appreciation.
Insight: Rising Financing Activity in Gold Sector
Gold financing reached a four-month high in April, with the number of transactions hitting an eleven-month peak. This uptick in financing activity aligns with the overall bullish outlook for the gold sector and indicates growing interest and investment in the industry.
In conclusion, UBS’s optimistic projections for gold and silver prices, coupled with expected M&A activity and heightened investor interest, paint a positive picture for the precious metals market in the coming years.
