Gold has had its best week in more than a year, and UBS believes the precious metal is poised for further growth. Spot gold prices rose about 1% on Friday amid rising tensions between Russia and Ukraine. This pushed gold's week-to-date gain to more than 5%, its biggest weekly gain since October 2023. Gold reached a record high in late October, but fell nearly 2% in November following President-elect Donald Trump's victory in the White House. , but this year it's still up more than 30%. XAU= YTD Mountain Gold/USD spot year-to-date However, Sagar Khandelwal, a strategist at UBS Global Wealth Management, said in a report on Thursday that even at current prices, bullion still has room to trade. He said that there is. He said rising geopolitical uncertainty is just one catalyst that could push gold prices higher heading into next year. Second, the global interest rate cut cycle will also be extended to 2025, which will further push gold prices higher. That's despite markets growing wary of the number of rate cuts expected in the coming months. According to CME Group's FedWatch tool, the market is pricing in a three-quarters of a percentage point cut through the end of next year, a lower revision than previously expected. Third, UBS strategists cited increased inflows to gold exchange-traded funds. He said the third quarter saw the most new money flowing into gold ETFs since the first quarter of 2022. Additionally, moves by central banks to diversify foreign exchange reserves away from the dollar could also provide additional support for gold, he said. “We expect the trend toward de-dollarization among central banks and private asset managers to continue,” Khandelwal said. “Central banks are estimated to have purchased around 900 tonnes of gold in 2024, an amount that could remain well above the 10-year average of around 325 tonnes per year.”
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