Gold prices have traded in the $3,200-$3,400 per ounce range since mid-April, with temporary spikes above $3,500 on April 22 and dips below $3,120 on May 15, according to UBS. Price stability has persisted despite modest outflows from exchange-traded funds and profit-taking by money managers in recent weeks.
UBS expects the precious metal to test the $3,500 per ounce level again as inflows resume. The company's base case remains optimistic about gold prices, anticipating a resurgence of buyer interest in the market in the coming months.
Recent discussions with investors reveal a shift in perspective regarding gold holdings, with many now viewing the metal as a long-term portfolio diversification tool rather than just a hedge against short-term geopolitical events. These trends reflect a more strategic approach to gold allocation among institutional and individual investors.
Data from the European Central Bank supports this shift, as gold now constitutes about 20% of total global official reserves, surpassing the euro in central bank holdings and ranking second only to the U.S. dollar. This represents a significant increase from the average allocation of around 14% in the previous decade.
UBS confirms that allocating a mid-single-digit percentage within a balanced portfolio is optimal for investors with a tilt towards gold. The firm continues to hold a long position in gold as part of its global asset allocation strategy.
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