FX.co ★ Swiss analysts predict gold gains once Federal Reserve cuts interest rates

Gold prices have risen above $4,250 per ounce for the first time since June, breaking out of a prolonged sideways range. Against the backdrop of this technical breakout, strategists at Swiss bank UBS have reaffirmed their global forecast: they expect the precious metal to reach $5,000 per ounce by the first half of 2027, implying about 18% upside from current levels.

Analysts attribute the recent rally to large purchases by Chinese institutional investors and a renewed inflow into gold-backed exchange-traded funds (ETFs). Additional support came from joint US–Japan efforts to prop up the yen — this reduced the risk of a massive sell-off in US Treasuries and benefited the precious metals market.

UBS’s optimistic outlook rests on three structural factors. First, the bank anticipates a decline in real yields on government bonds. Experts believe that slowing inflation will allow the Federal Reserve to keep the status quo on interest rates this year, but the regulator will resume rate cuts in 2027, which would sharply increase the appeal of non-yielding assets.

Second, analysts predict a weaker US dollar due to the swollen US budget deficit and a global trend toward de‑dollarization of investment portfolios. The third pillar is steady demand from central banks. Sovereign purchases effectively create a firm price floor, insulating the market from drawdowns during periods of weak retail interest.

Still, the Swiss analysts warn that the path to $5,000 will not be entirely smooth. If the US economy shows resilience and high oil prices keep inflation elevated, the Federal Reserve may postpone monetary easing. That would keep real Treasury yields high and provoke short-term volatility in the gold market.