Gold’s recent decline has led some investors to question its status as a safe-haven asset. However, UBS maintains that the fundamental case for gold remains strong despite the short-term pullback.
The price of gold has fallen from above $5,400 in early March to just over $5,000, after briefly dropping below this key level during Monday’s trading session. This movement has raised concerns about whether gold can still serve as a reliable store of value in volatile markets.
UBS strategist Joni Teves addressed these concerns, stating that gold continues to play an important role as a portfolio diversifier. According to the bank, the core drivers behind gold’s long-term upward trend remain intact, and increasing investor allocations could push prices to new record highs later this year.
Teves acknowledged that current market conditions have created short-term pressure. Higher real interest rates and a stronger U.S. dollar are acting as headwinds for gold. In addition, markets are closely watching the inflation impact of rising oil prices and how this could influence Federal Reserve policy.
Despite these challenges, UBS emphasized that these factors represent only part of the broader outlook. Slower economic growth could lead to fiscal or monetary stimulus, which would likely support higher gold prices.
Geopolitical uncertainty continues to be another key factor supporting demand. UBS noted that ongoing global tensions are encouraging investors to diversify their portfolios, reinforcing gold’s role as a strategic asset.
The bank also suggested that recent price declines may present buying opportunities. UBS continues to expect gold to reach new highs this year, maintaining a positive long-term outlook.
In addition, the broader precious metals market has remained relatively resilient. Silver, platinum, and palladium have held up well, despite concerns about weaker industrial demand.
