Gold Demand Surge Prompts UBS to Lift Price Target to $3,600/oz

Gold has outshined every major asset in 2025, climbing 28% so far and reaching $3,337 per ounce in mid-August. UBS forecasts the metal to hit $3,500 by December and keep rising into 2026. Driving factors include central banks’ steady buying, the strongest ETF inflows since 2010, and rising global demand—the highest since 2011. UBS points to U.S. fiscal concerns, geopolitical tensions, and a weaker dollar as further support. While higher Fed rates remain a risk, the bank says gold remains a key hedge and portfolio diversifier.

Gold is often dismissed as outdated, but the numbers tell another story. Adding just 10% gold to an equity-heavy portfolio barely reduced returns yet significantly cut risk and improved downside protection. In nearly every major downturn over the past decade, gold buffered losses—helping investors stay the course when markets were at their worst. Despite lacking yield, gold remains a crisis-tested store of value trusted worldwide, making it an obvious choice for portfolio resilience.

Goldman Sachs analysts argue that gold acts more like Manhattan real estate than oil. The reason: gold isn’t consumed like other commodities; it’s accumulated and passed between owners. With nearly 220,000 metric tons still in existence and annual supply adding just 1%, prices are determined by buyers’ willingness to hold. Two groups dominate the market: conviction buyers (central banks, ETFs, speculators) who buy regardless of price, and opportunistic buyers (emerging market households) who step in only when prices drop. Similar to Manhattan housing, where a fixed supply means the “marginal buyer” sets the price, conviction buyers explain about 70% of

Gold and silver are holding steady despite strong year-to-date gains, with prices boxed in by a lack of fresh catalysts. Gold has pivoted around $3,350 in recent months, supported by record ETF holdings (25-month high) and central bank accumulation, while silver benefits from industrial demand and ongoing supply deficits. Still, rallies are capped by firm Treasury yields and fading dollar strength. Attention now turns to Jackson Hole and Fed Chair Powell’s keynote, with markets pricing a September rate cut but uncertain about the path ahead. A dovish Fed pivot, weaker labor data, or renewed geopolitical tensions could provide the spark