Why gold price could still rise by 24% in 2026
Prices of precious metals have fallen sharply from record highs, but one City analyst believes there’s still substantial upside for the yellow metal this year.
28th May 2026 15:27
by Graeme Evans from interactive investor
Gold’s return to a record price has been forecast after a City bank said worries over the opportunity cost of holding the non-yielding asset should ease in the coming months.
Fears that higher energy prices will lead to tighter monetary policy from the Federal Reserve and other central banks have contributed to a 16% fall since the start of the Iran war.
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The price today stood at a two-month low of $4,427 an ounce, which compares with January’s record high above $5,400. A 60%-plus surge during 2025 boosted London-listed stocks including Hochschild Mining, Pan African Resources and Endeavour Mining.
UBS this week cut its year-end forecast from $5,900 an ounce but said it does not believe the structural bull market is over after putting in place a new estimate of $5,500.
It believes that supportive drivers can reassert themselves over the medium term, including the precious metal’s perceived value as a hedge against rising global debt burdens.
Source: TradingView. Past performance is not a guide to future performance.
The bank points out that central bank gold buying is likely to remain robust and more than offset the recent softening of demand from investors and jewellery customers.
UBS Global Wealth Management told clients in a note today that it continued to view the metal as a source of diversification in portfolios.
It added: “More broadly, commodities offer a valuable hedge against inflation and supply shocks, and their typically low correlation with equities and bonds makes them an effective portfolio diversifier, especially in periods of market stress.”
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The bank said that gold’s near-term performance will remain sensitive to US-Iran headlines, energy prices, US bond yields and the movement of the US dollar.
Against a backdrop of rising interest rate expectations, the inverse relationship between US real yields and non-yielding gold characteristics has reasserted itself over recent months.
However, the bank continues to believe that the Federal Reserve will cut rates in December as evidence mounts that higher energy costs have not generated large second-round effects.
UBS added: “Looking into 2027, a more neutral monetary policy backdrop could weaken support for the US dollar and improve investor appetite for gold once again.”
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The bank has retained its year-end target for silver at $80 an ounce, having seen the price stabilise in the range of $70-90 since April. It had topped $100 in late January after a surge from near to $40 in mid-September.
A less compelling investment backdrop recently prompted UBS to narrow its market deficit estimate for silver to 60-70 million ounces from 300 million ounces previously.
It said this week: “Unlike gold, which benefits from robust central bank buying, silver lacks this strategic demand anchor and remains absent from official sector reserves.
“As a result, silver is more vulnerable to shifts in private investment and industrial demand, and is likely to lag gold.”
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