Although they anticipate some short-term consolidation in the yellow metal’s prices amid increased volatility, UBS analysts stated that gold’s rally is far from finished and that prices might reach as high as $6,200 an ounce by mid-2026.
As leveraged bets unwind, gold may trade in a limited range in the upcoming days, according to a new analysis from UBS. The analysts added, “We believe gold will rise thereafter toward our mid-year forecast of $6,200 and continue to rate it as an attractive hedge, even though we anticipate consolidation between $4,500 and 4,800/oz in the coming days due to volatility from margin calls.”
Silver is currently trading at $75.3 per ounce, while gold is trading at $4,872.60 per ounce on the COMEX in New York.
But Silver is still a separate matter. After the white metal’s recent rapid gain and subsequent severe drop, UBS cautioned that it is likely to remain volatile. Silver prices dropped more than 7% to $77 per ounce on Thursday in international markets. Silver was trading close to Rs 2.44 lakh a kilogram on the MCX, down more than 21% in a week.
Building up long-term exposure to silver is premature. We believe investors should carefully examine the return required for an asset that has recently shown volatility, even as we stick to our forecasts. From a risk-reward standpoint, a further retreat is required before moving forward with the metal, according to UBS.
Even gold has experienced severe fluctuations. Prices fell almost 12% from record highs on January 30 before reducing losses to close down 8.5%. According to UBS, this was the biggest single-day decline in 13 years, a degree of volatility usually associated with shifts in expectations for Federal Reserve policy.
The sell-off, according to UBS, was caused by a combination of profit-taking following significant gains, declining futures market liquidity, and mounting worries about interest rates and the US dollar. Given that Kevin Warsh is known to favor stricter monetary policy, balance-sheet discipline, and institutional reform at the Fed, rate concerns grew when US President Donald Trump selected Warsh to lead the Fed.
Additionally, UBS emphasized that gold bull markets seldom finish just because prices spike or anxiety fades. In the past, they only come to an end when central banks firmly adopt a new policy regime and regain their credibility.
“We don’t think this is the end of gold’s bull market because Warsh hasn’t shown the same credibility as Volcker,” UBS stated.
The bank claims that gold is currently in the mid-to-late stage of its current bull run, which is characterized by new highs interspersed with sporadic 5-8% declines.
Significantly, UBS stated that the usual elements that have historically been linked to the end of the gold market have not yet occurred. These elements include persistently high real interest rates, a structurally stronger US dollar, better geopolitical situations, and fully restored central bank credibility.
Although Warsh’s nomination immediately caused a hawkish response, pushing the dollar higher and pulling gold and bitcoin lower, UBS thinks concerns about an abrupt, Volcker-style tightening are unfounded.
But Warsh’s past performance and changing views on policy point to a more nuanced picture. Therefore, we think a major departure from accommodative monetary policy—like a tightening in the Volcker style—is improbable,” the bank stated.
