• UBS lowered its gold price forecasts by $300-$900 per ounce, citing a stronger dollar and higher yields as near-term headwinds.
  • The bank sees gold falling toward $3,850-$4,000 per ounce in the near term but maintains a bullish 12-month outlook on expectations of future rate cuts and central bank buying.
  • The revision reflects a broader shift in market sentiment as strong U.S. economic data delays the timing of Federal Reserve easing.

UBS has joined the growing chorus of banks scaling back gold price expectations, cutting its forecasts by $300 to $900 per ounce amid a backdrop of resilient U.S. economic data and a hawkish repricing of Federal Reserve policy. The revised targets come as the dollar strengthens and Treasury yields climb, increasing the opportunity cost of holding non-yielding gold.

"Near-term pressure on gold is likely to persist as long as yields remain elevated and the dollar stays firm," UBS analysts Dominic Schnider and Wayne Gordon wrote in a note. They now see gold trading in a softer range around $3,850 to $4,000 per ounce in the coming months, down from previous projections that had prices well above $4,500.

Despite the downgrade, the bank remains structurally bullish over a 12-month horizon. "Our longer-term conviction is intact," they added, citing anticipated rate cuts later this year, potential dollar weakness, and continued central bank gold purchases as key drivers for a rebound.

The revision reflects a broader recalibration across Wall Street. Several major institutions have similarly trimmed their gold forecasts in recent weeks as sticky inflation and robust employment data push back expectations for the first Fed cut. Markets now price a first move no earlier than the second half of 2026, a sharp shift from earlier hopes of a spring cut.

Gold prices have already felt the sting. Spot bullion slipped to around $4,050 an ounce on Thursday, down from a record high above $4,800 earlier this year. The metal's sensitivity to real rates remains a dominant theme, with every tick higher in yields weighing on sentiment.

Still, long-term bulls point to structural demand from central banks, which have been diversifying reserves away from the dollar at a record pace. Sovereign debt concerns and geopolitical uncertainty also underpin the metal's appeal as a store of value.

One trader, speaking on condition of anonymity, said the pullback is a buying opportunity. "This is just a speed bump. Once the Fed pivots, gold will rip higher again."

UBS declined to comment beyond the research note.

Correction: An earlier version of this article misstated the timeframe for UBS's long-term outlook. It is 12 months, not 18 months.