Demand for gold remains steady, despite a slight dip following news of the failed US-Iran negotiations.
According to several media reports, Union Bancaire Privee is resuming gold purchases after significantly reducing its positions in response to the downturn caused by the war in Iran, stating that it believes the long-term outlook remains unchanged. The Swiss private bank is gradually increasing its allocation of the precious metal in clients' discretionary portfolios after cutting this allocation from around 10% to 3%.
It should be noted that the price of the metal has sharply declined since the beginning of the war due to concerns about rising interest rates and liquidity shortages, prompting traders to liquidate assets to cover losses in other markets. "We have taken the first steps towards rebuilding gold portfolios after eliminating one-sided positions," said the company. According to them, positions for institutional and retail investors in precious metals are now sufficiently balanced. As of last year, the bank managed client assets totaling around CHF 184.5 billion (USD 233 billion).
The statement indicated that UBP aims to further restore its gold positions, primarily in gold-backed exchange-traded funds, after their share in discretionary portfolios fell to approximately 6%. The bank still expects prices to rise to $6,000 per ounce by the end of the year, as structural demand, including central bank purchases, concerns over budget deficits, and geopolitical tensions, remains unchanged.
Despite the recent decline, the price of the precious metal has still increased by about 80% since the beginning of 2025.
As mentioned earlier, the price of gold fell on Monday after peace talks between the US and Iran ended without results, and the US announced a blockade of the Strait of Hormuz. Since the onset of the war, the price of gold has dropped by about 10% as investors focused on inflationary risks amid surging energy prices. According to the latest data, the risk of a sharp rise in inflation has slightly decreased but remains a significant concern. This could pressure gold in the short term, but it has not affected steady long-term demand.
The UBP viewpoint aligns with that of several investment banks that have recently reaffirmed the long-term prospects for gold despite the recent decline. ANZ Banking Group Ltd. and Goldman Sachs Group Inc. also forecast rising gold prices.
Regarding the current technical picture for gold, buyers need to reclaim the nearest resistance at $4,771. This will allow them to target $4,835, above which it will be quite challenging to break through. The further target will be the area of $4,893. In the event of a decline in gold, bears will attempt to gain control over $4,708. If this is achieved, a breakout below this level could deliver a serious blow to bullish positions and push gold down to a low of $4,647, with the potential of reaching $4,591.