Gold Prices Hit Record Highs: UBS Sees Further Upside Amid Trade War Concerns

Gold reached a new all-time high of $3,004.94 per ounce, yet UBS strategists believe the precious metal still has room to grow. They have revised their price target upward to $3,200 per ounce from an earlier target of $3,000 per ounce.

Key Drivers Behind Gold's Rally

• Strong Performance in 2024:
  Gold has surged 27% in 2024 and is up 14% year-to-date. The metal last broke the "thousand-dollar" barrier in August 2020 during a pandemic-driven rally, and this recent run continues to underscore its safe-haven appeal.

• Policy Risks and Trade Conflict:
  According to strategists led by Wayne Gordon, as long as policy risks and an intensifying trade conflict persist, investors will continue to seek refuge in gold. UBS has even increased the probability of a prolonged trade war from 25% to 35%, especially in light of the upcoming trade investigation findings from the Trump administration scheduled for April 2.

• Shift in Market Sentiment:
  Market sentiment has shifted from reliance on the "Trump put" to a "Fed put," reflecting growing recession risks and waning confidence in U.S. equities. Despite gold being technically overbought in the short term, this shift has bolstered its stability.

• Technical and ETF Support:
  A step back from aggressive trade policies could reduce the defensive buying of gold, with technical support observed at $2,850 per ounce. Additionally, renewed inflows into ETFs—most notably the SPDR Gold Trust (GLD), which reported holdings of approximately 908 metric tons in February (its highest since February 2023)—further support gold's upward trajectory.

Looking Ahead

UBS's revised outlook suggests that as long as geopolitical and economic uncertainties persist, gold's rally is likely to continue. However, any easing in trade tensions or a significant policy shift could temper this demand, potentially leading to a correction. Investors will be closely monitoring these factors to gauge the sustainability of gold's gains.

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Conclusion

Gold's new record high, combined with UBS's bullish outlook, points to further upside potential, driven by ongoing policy risks and trade tensions. While technical levels and ETF inflows provide support, investors should remain mindful of potential shifts in market dynamics. Utilizing robust data from FMP's APIs can help in navigating this volatile landscape and making informed investment decisions.