UBS Forecasts Gold at $5,400 by Late 2027, Citing Weaker Dollar and Lower Real Rates

UBS has extended its forecast horizon for gold, introducing a new end-September 2027 price target of $5,400 per ounce. The bank's strategists attribute the bullish long-term view to a combination of falling real interest rates, a weaker U.S. dollar, and sustained investment demand.

The Catalysts for a Higher Gold Price

According to UBS, the forecast hinges on the expectation that disinflation will become a more prominent theme in 2027. This, combined with U.S. economic activity running at or below its trend, is expected to support a less restrictive monetary policy from the Federal Reserve, weighing on the dollar and real rates.

The bank's strategists outlined three key conditions necessary for gold to continue its rally:

• Continued weakness in the U.S. dollar.
• A decline in expected U.S. real interest rates.
• Strengthening demand from investors.

While the new 2027 target has been introduced, UBS kept its end-2026 forecast unchanged at $4,600 per ounce.

Strong Demand Fundamentals

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Recent market activity has been supported by robust demand from both investors and central banks. UBS notes that gold ETF inflows have resumed, initially led by China and more recently by Europe. Central bank buying also remains a solid pillar of support.

Citing the World Gold Council, UBS pointed to net purchases of 51 metric tons by central banks in June. Separately, the People’s Bank of China added another 20 metric tons to its reserves in July, its largest single-month increase since October 2023. To sustain a price at or above $5,000 per ounce, UBS estimates that investment demand of roughly 500 metric tons per quarter would be required.

Risks to the Outlook

The primary risk to the bullish forecast is a more hawkish Federal Reserve, according to UBS. An unexpected Fed rate hike this year could lift real yields and strengthen the dollar, which would likely weaken investor demand for gold.

In such a scenario, UBS strategists believe gold could fall to test the $3,850 per ounce level. Conversely, they view any price pullbacks toward the $4,000 per ounce mark as potential opportunities for investors to add exposure to the precious metal.