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Central Bank Demand and Safe-Haven Status to Drive Gold to $3,700
UBS has sharply revised its 2026 gold price forecast upward, citing persistent US macroeconomic risks and accelerating de-dollarization trends. The Swiss investment bank now expects gold to average $3,600 per ounce in Q1 2026—$100 above its previous projection. By Q2 and Q3 of 2026, UBS anticipates further gains, with prices reaching an average of $3,700.
Meanwhile, rising central bank gold purchases and robust ETF inflows continue to anchor bullish sentiment. These dynamics reflect a global realignment in reserve asset preferences, with bullion gaining ground over the US dollar.
Strong Central Bank Buying Signals Enduring Demand
UBS attributes the revised gold price forecast to strong structural demand. The bank expects global gold demand to rise 3% year-over-year to 4,760 tonnes in 2025—the highest level since 2011. This projection comes despite an anticipated moderation in central bank purchases, which nonetheless remain elevated.
The report highlights factors such as concerns over US fiscal sustainability, geopolitical instability, and doubts about Federal Reserve independence. These variables are pushing central banks and institutional investors toward gold as a geopolitical and inflation hedge.
In parallel, ETFs are seeing net inflows, reversing outflows observed in 2023. These investment vehicles are amplifying price momentum and signaling broader investor interest in gold as a long-term store of value.
Policy Risk and Market Volatility Support Bullion’s Ascent
As global markets face renewed uncertainty due to trade tensions and inflation pressures, UBS sees gold’s safe-haven appeal intensifying. The April 2025 spike to $3,500 per ounce—an all-time high—demonstrated the market's response to macro stressors.
Furthermore, Citi has echoed similar bullish views, recently projecting gold to trade between $3,300 and $3,600 in the short term. These aligned forecasts suggest increasing institutional consensus around gold’s strategic role in the coming economic cycle.
UBS concludes that gold will remain a preferred asset class well into 2026, driven by enduring macro risk factors and a structurally higher baseline for central bank reserves.
ScrapInsight Commentary
UBS’s forecast revision signals deeper systemic concerns over US economic policy and reserve currency dominance. Sustained central bank gold buying reinforces bullish fundamentals through 2026. For scrap metal stakeholders, higher bullion prices may elevate recycled gold margins while reshaping sourcing economics and refining capacity investments globally.
