UBS Forecasts Gold at $5,400 Amid Sustained De-dollarization

The bank’s Chief Investment Office notes that recent concerns regarding the U.S. fiscal trajectory have accelerated a long-term shift in reserve holdings. While geopolitical tensions and oil prices may provide the dollar with temporary support, analysts view the depreciation trend as durable. This outlook is bolstered by central bank activity; for instance, the People’s Bank of China added 20 metric tons of gold to its reserves in July, marking its largest monthly increase since late 2023.

Beyond bullion, UBS recommends a broader diversification strategy to hedge against inflation and currency instability. This includes exposure to industrial metals, which are expected to benefit from the global buildout of AI infrastructure and energy transition efforts, as well as select currencies such as the British pound and the Norwegian krone. Despite the potential for volatility if U.S. economic data remains firm, the bank maintains that structural deficits and high investor allocations to dollar-denominated assets will ultimately weigh on the currency, providing a long-term tailwind for gold prices.