Gold is on track for its best week in more than a year, and UBS believes the precious metal has further to come. Spot gold rose about 1% on Friday as tensions between Russia and Ukraine intensified. That has pushed gold prices up more than 5% so far this week, the biggest weekly percentage gain since October 2023. 2%, but it is still up more than 30% this year. XAU = YTD spot gold against USD But UBS Global Wealth Management strategist Sagar Khandelwal said in a report released on Thursday that even from current prices, gold bullion still has more room to rise. He said rising geopolitical uncertainty is only a catalyst for higher gold prices next year. Secondly, the global interest rate cutting cycle will also extend to 2025, which will become another driving factor for higher gold prices. This is true even as markets become more cautious about the number of possible rate cuts in the coming months. CME Group’s FedWatch tool shows the market is pricing in the equivalent of a three percentage point decline by the end of next year, below previous expectations. Third, UBS strategists pointed out that more funds are flowing into gold exchange-traded funds. He said the amount of money flowing into gold ETFs in the third quarter was the largest since the first quarter of 2022. In addition, he said that central banks’ efforts to diversify their foreign exchange reserves away from the US dollar may also provide some additional support for gold. “We expect the de-dollarization trend by central banks and private asset managers to continue,” Khandelwal said. “We estimate that central banks will buy about 900 tons of gold in 2024, and these volumes can be maintained at well above the previous decade. An average of about 325 tons of gold per year.”
