UBS Forecasts Gold at $2900 by End of 2025 on Sticky Inflation and Rising Risks
2min read UBS has raised its forecast for gold prices, projecting the precious metal to reach $2900 per ounce by the end of 2025. The bullish outlook is driven by a confluence of factors, including persistent inflation, mounting geopolitical and economic risks, and structural changes in the global economy.
Gold has long been considered a safe haven asset, and UBS recommends increased exposure as a hedge against growing U.S. debt, policy uncertainty, and a challenging macroeconomic environment. Central banks' increasing demand for gold, coupled with expectations of falling interest rates, further supports the case for higher prices in the coming years.
UBS identifies sticky inflation as a primary driver of its forecast. The bank projects U.S. inflation to remain above the Federal Reserve's 2 percent target, hitting 3 percent by the end of 2024 and moderating to 2.6 percent in 2025 and 2.5 percent in 2027.
Despite recent monetary tightening, inflationary pressures are expected to persist due to structural trends such as rising deficits, deglobalization, and the global push for decarbonization.
One notable factor contributing to prolonged inflation is the green energy transition. As nations move toward more sustainable energy systems, the limited availability of natural resources, coupled with higher environmental taxes, insurance costs, and regulatory restrictions, is expected to elevate energy prices. These increases could ripple across the economy, fueling broader price gains.
Another key influence is U.S. trade policy under the Trump administration. Protectionist measures, including tariffs and trade restrictions, are likely to result in higher costs for businesses and consumers, slower global economic growth, and additional inflationary pressures.
UBS also highlights the growing U.S. national debt as a significant economic concern. Rising deficits, exacerbated by higher interest payments and fiscal pressures, create an environment where gold becomes increasingly attractive as a store of value. Central banks have responded to these risks by bolstering their gold reserves, a trend UBS expects to continue, adding upward pressure to prices.
Lower interest rates are another factor bolstering gold's appeal. As rates decline, the opportunity cost of holding non-yielding assets like gold diminishes, making it more attractive to investors. UBS expects this dynamic to further support demand through 2025.
UBS's $2900 gold forecast underscores the bank's view that structural shifts in the global economy and persistent inflation will redefine the investment landscape over the next decade. In this environment, gold offers both protection against systemic risks and a potential hedge against the erosion of purchasing power caused by inflation.
Investors are advised to monitor inflation trends, central bank policies, and geopolitical developments closely, as these factors will likely shape the trajectory of gold prices in the coming years. While the forecast represents a significant upside from current levels, the interplay of macroeconomic forces will ultimately determine whether gold can reach UBS's ambitious target.