Gold prices can hit $6200/oz; bull-market not over yet, says UBS

Silver, on the other hand, UBS said, is likely to remain volatile going ahead in the backdrop of the sharp run seen in the last few months and the ensuing correction seen in the white metal recently.

The bull-market in gold is not yet over and prices can rise to $6,200 an ounce (oz) by 2026-mid, up nearly 25 per cent from the current levels, suggest analysts at UBS in a recent note. 

 

"While we anticipate consolidation between $4,500 and 4,800/oz in the coming days due to volatility from margin calls, we believe gold will rise thereafter toward our mid-year forecast of $6,200 and continue to rate it as an attractive hedge," UBS' analysts wrote.

 

Silver, on the other hand, UBS said, is likely to remain volatile in the backdrop of the sharp run seen in the last few months and the ensuing correction seen in the white metal recently. 

 

 

On Thursday, silver prices crashed crashed over 7 per cent to $77/oz in the international markets. On the MCX, it traded at around Rs 244,000 per kilogram, down over 21 per cent in a week.

 

"It is too early to build long-term exposure to silver. While we maintain our forecasts, we think investors should carefully consider the return required for an asset that has recently exhibited volatility. A further pullback is needed before turning constructive on the metal from a risk-reward perspective," UBS said.

  Meanwhile on January 30, gold prices dropped sharply from the record highs achieved the day before. At its lowest point, the price was down nearly 12 per cent—but later recovered to close with an 8.5 per cent loss. This marked the most substantial one-day decrease in 13 years, according to UBS' estimates—a level of volatility commonly observed following shifts in Federal Reserve policy. 

 

  Multiple factors contributed to the sell-off, including investor profit-taking after recent gains, reduced liquidity in futures markets, and emerging risks associated with interest rates and the strength of the US dollar. 

 

Concerns regarding interest rates, too, intensified, UBS said, after President Donald Trump nominated Kevin Warsh—an advocate for strict monetary policy, restrained growth of the Federal Reserve’s balance sheet, and institutional reform—as Fed chair.

Bull markets: Gold, Silver

Gold prices, according to Nigel Green, chief executive officer (CEO) of deVere Group, a global consulting firm that has $14 billion assets under management, slipped not because long-term holders suddenly changed their views, but because leveraged holders had to exit.

 

"This phase tends to be self-limiting. Once leverage is flushed out, selling pressure eases naturally. Traders who were forced sellers are no longer present, daily price swings narrow, and liquidity improves. The recovery may not be immediate or dramatic, but, we believe, the mechanics favor a bounce rather than continued freefall once the forced phase ends," he said.

 

Gold bull markets, UBS too believes, typically don't conclude simply because fears diminish or prices become too high—they end when central banks establish their credibility and pivot to a new monetary policy regime. "Since Warsh hasn't demonstrated the same credibility as Volker, we don't believe this is the end of gold’s bull market," UBS said.

 

Gold prices, according to UBS' estimates, are currently in the mid-to-late stage of its present bull-market, moving from a consistent upward trajectory to one reaching new peaks but with intermittent drawdowns of 5-8 per cent.  

 

"Importantly, the typical factors historically associated with the conclusion of gold’s bull market—sustained elevated real interest rates, a structurally stronger US dollar, improved geopolitical conditions, and fully re-established central bank credibility—have not yet materialized," UBS said.

 

The initial market response to Kevin Warsh’s nomination, UBS believes, has generally been viewed as hawkish, particularly regarding his approach to the Fed’s balance sheet. This sentiment, it said, has manifested in lower gold and bitcoin prices, alongside a modest appreciation of the US dollar. 

 

"However, Warsh’s historical record and evolving policy perspectives suggest a more complex outlook. As such, we believe a significant shift away from accommodative monetary policy—such as a Volcker-style tightening—is unlikely," UBS said.