UBS Maintains Year-end Gold Target of $5600, Silver Target of $100

Despite recent pressure on gold prices, UBS's forecast for precious metals remains unchanged for the year-end.

UBS precious metals strategist Joni Teves stated in a media conference call on Tuesday that the bank is maintaining its target price for gold at $5,600 per ounce and for silver at $100, on the grounds that the fundamental factors underpinning precious metal trends remain intact.

Real interest rate compression unchanged, structural support for gold remains

Teves pointed out that since the outbreak of the Iran war, gold prices have been under pressure, but rising inflation coupled with the Federal Reserve's leave interest rates unchanged has led to sustained compression of real interest rates - this combination structurally supports gold. Continued buying from retail and institutional investors indicates that the theme of "diversified allocation" remains solid.

At the global central bank level, Teves believes that it is "highly unlikely" for central banks to stop buying gold, even less likely to sell gold directly, providing a continuous floor of demand for gold prices.

UBS also pointed out that the consolidation of gold prices in recent weeks has provided investors with a window to rebuild positions, and that gold prices could actually exceed their forecast levels.

Silver: Demand outstripping supply, strong buying from China, India, and the Middle East

The logic for the upward trajectory of silver prices is equally clear. UBS states that silver prices will be driven by rising gold prices, and the metal's own fundamentals also provide support—this year's silver demand is expected to outpace supply, and investment demand from China, India, and the Middle East remains strong.