UBS Analysts Say the Current Correction in the Gold Market is Temporary

An analysis conducted by UBS, an investment banking firm, indicates that the current correction in the price of gold is merely technical and won’t last given that the fundamentals of the market remain strong. They say the precious metal will soon resume its upward momentum.

In a research note that they released on Monday, the analysts say that this particular correction had been expected and it has now taken a pause. The Switzerland-based banking giant highlighted the fact that the demand underlying the metal’s bull-run is still present and strong. They also referenced a report published by the WGC (World Gold Council) indicating that the buying of gold remained strong and was accelerating as individual investors and central banks exhibited strong appetite for the metal.

The WGC report indicated that so far, central banks had bought 634 tons of the metal and their purchases were gaining momentum in Q4, making such purchases on track to reach the prediction of 900 to 950 tons expected to be bought by these entities this year.

The UBS note also explained why they believed investor interest in gold is still far from peaking. According to available data, gold-linked ETFs have so far bought gold amounting to 222 tons thus far in 2025. Purchases of gold coins and bars have also exceeded 300 tons, an indication that investor interest in the safe haven metal is growing. According to the analysts, investors have not yet allocated sufficient gold to their portfolios, which creates conditions for the metal’s price to keep appreciating.

According to UBS, “sufficient” portfolio allocation should be slightly less or slightly more than 5% of an investment portfolio. To them, a lot more investors haven’t reached that fraction, so a lot more gold is likely to be bought before this rally runs its course.

The investment bank says there’s significant upside potential for the metal given increasing government debt, geopolitical turmoil, a weakening dollar and reduced real interest rates. These factors could fuel the price of gold to about $4,700 an ounce by the first quarter of 2026. Gold mining stocks are also likely to appreciate considerably during this time, UBS adds.

UBS says that as the U.S. Fed continues to cut interest rates, real interest rates run the risk of going into negative territory. As that reality takes root, a lot more investors will be driven to shift from holding Treasuries to putting their money in the gold market. Such a shift will add impetus to price increases by the precious metal.

Given the way the Swiss bank is bullish on gold and what has so far been witnessed in the market, mining companies like Platinum Group Metals Ltd. (NYSE American: PLG) (TSX: PTM) can look forward to greater revenues from their gold sales and a likely uptick in investor interest in their stocks.

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