Gold may fall back toward $4,000 an ounce in the near term as elevated U.S. Real yields and a firm dollar make the non-yielding metal less attractive, UBS strategist Giovanni Staunovo said. Spot gold was trading at about $4,191 when the assessment was issued, leaving the proposed support level roughly 5% below that price.
The recent decline appears to have been driven mainly by non-commercial traders cutting net-long positions in futures and options. Exchange-traded fund holdings have remained unusually resilient, however, with inflows continuing in recent weeks. UBS expects longer-term buyers to emerge near $4,000 and form a floor beneath the market.
Staunovo said gold has held up better than might have been expected during the rise in yields, indicating that its sensitivity to real interest rates may have weakened as structural demand offsets cyclical pressure. The factors cited include central-bank reserve diversification, concern over public debt and debt-servicing costs, the prospect of a weaker dollar over time and strong Chinese buying. Lower prices and the festival season could also support demand in India.
Preliminary September figures showed China adding 23 metric tons to its gold holdings and Uzbekistan adding 7 tons. UBS expects central banks to purchase between 750 and 1,000 tons annually. The market was pricing slightly more than 75 basis points of Federal Reserve tightening through 2027, while UBS expected one further hike in the current year followed by two quarter-point cuts in 2027; the bank said a reassessment toward lower real yields would support gold.
UBS’s price targets rise from $4,600 by December to $5,000 by March 2027, $5,200 by June and $5,400 by September. Staunovo described pullbacks toward $4,000 as opportunities to increase exposure and recommended a mid-single-digit allocation to gold for investors seeking real assets.