Top broker UBS has increased its forecast for the gold price from US$5,000 per ounce to US$6,200 per ounce for 1Q FY26.
Today, the gold price is US$5,010 per ounce, up 0.8%. Therefore, the UBS forecast implies a near 25% potential upside from here.
In a new note, strategists Wayne Gordon from UBS Singapore and Giovanni Staunovo from UBS Switzerland said they expected the gold price to reach US$6,200 per ounce in the March quarter, and remain at about that level in the June and September quarters.
They forecast a pullback in the December quarter, after the US midterm elections in November, to about US$5,900 per ounce.
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UBS explains its upgraded gold price forecast
Gordon and Staunovo explained why the forecast had changed:
This adjustment reflects our view that demand will be higher than previously expected, driven by higher investment activity rather than higher central bank purchases.
In terms of demand for physical gold, the strategists referenced data from the World Gold Council showing that total demand in 2025, including over-the-counter (OTC) transactions, exceeded 5,000 metric tonnes for the first time, mainly due to robust investment activity.
They said:
ETF holdings rose by 801 metric tons, bar and coin purchases reached a 12-year high of nearly 1,375 metric tons, and central banks acquired 863 metric tons.
The central bank purchases were slightly below expectations for the year and the record amounts of the previous years, but they're still strong in a historical context.
Jewelry volumes declined, as anticipated, due to elevated prices, but sales were higher than we projected.
As we reported last year, jewellery sales are also going the other way, with some Aussies cashing in their rings, necklaces, and other items.
Record inflows into gold ETFs
The analysts' expectations of higher investment activity in 2026 are borne out in the latest monthly inflow data for gold ETFs.
The World Gold Council reports a record net monthly inflow of US$19 billion (A$27.3 billion) into gold ETFs in January.
ASX gold ETFs attracted US$202 million in net inflows last month.
There is now a record US$669 billion in assets under management via gold ETFs, and US$8.6 billion of that is in ASX gold ETFs.
Gordon and Staunovo said:
We now expect continued strong central bank buying, higher ETF inflows, and more bar and coin purchases, driven by lower US real rates, ongoing global economic concerns, and uncertainty surrounding US domestic policy, especially related to the midterm elections and increased fiscal stress.
Could the gold price break US$7,000?
The strategists said the gold price could go as high as US$7,200 per ounce under the right circumstances.
However, it could also go the other way.
… we now project an upside scenario target of USD 7,200/oz and a downside scenario of USD 4,600/oz (this is close to a one standard deviation move).
A hawkish pivot by the Federal Reserve could heighten risks to the downside, while a steep escalation in geopolitical tensions could bring us closer to the upside scenario.
Gold continues to be rated as Attractive, and we maintain a long position in our global asset allocation.
We also recommend using options strategies for investors seeking to manage downside price risks.
ASX gold shares today
ASX gold shares are higher on Monday, with the S&P/ASX All Ords Gold Index (ASX: XGD) up 4.6% at the time of writing.
The Northern Star Resources Ltd (ASX: NST) share price is up 2.78% to $27.52.
The Evolution Mining Ltd (ASX: EVN) share price is 3.66% higher at $14.87.
Newmont Corporation CDI (ASX: NEM) shares are up 6.3% to $164.56.
The Genesis Minerals Ltd (ASX: GMD) share price is up 3.2% to $6.86.
Perseus Mining Ltd (ASX: PRU) shares are 5.1% higher at $5.61.
