UBS Increases Gold Forecast

UBS recently increased its March 2026 gold forecast by $100 to $3600. As much as regulatory entities try to make gold take a back seat, everyone else seems to recognize its huge value added to any investment portfolio. The continuing acceleration of the Dollar’s decline is a huge factor in the UBS gold increase projection. US macroeconomic instability makes the situation even better for gold. Other central banks have been heating up their gold purchases, driven by the previous two factors, and exacerbating the rise of gold. UBS sees all of these factors adding gasoline to an already raging fire of gold price increase, but their estimate may even be an underestimate if the current gold-friendly conditions continue. 

While many of Trump‘s mercantilist allies would cling to the belief that his irresponsibility will not be punished, his terrible fiscal and monetary moves are already being recognized by a huge drop in international trust of the dollar. UBS is picking up on the obvious trend towards de-dollarization as a result of weakened political ties and a wake up call to the inherent instability of the dollar. Even at its best, the dollar was only the least of many evils in comparison to other fiat currencies. With someone in power in Washington that other countries do not understand, it becomes even easier to see the same weak dollar that has remained true for many years. This political distrust could easily be overcome if Trump resolved to spend less and made any sort of plan to overcome the current debt situation. However, he is unable to connect the dots between our actions and the fact that those same actions lead to the ruin of many third world countries. Namely, we cannot keep printing and borrowing ourselves out of crisis. 

UBS clings onto gold’s second greatest champion, which is fear. The variety of fear used in this case is fear of US economic disaster. In addition to not understanding the leadership in Washington, international leaders are afraid of a world with an unstable American economy. Even beyond monetary issues, drastic changes in trade regulations and foreign policy raise demand for gold across-the-board. Smaller countries, not wanting to step across newly torn international fault lines are able to use gold as a neutral ballast without having to give up independence for protection as they try to fill the gap left by the US. Gold performs unusually well in times of crisis, so the instability of the world’s most dynamic economy has everyone from retail consumers to central banks purchasing more gold as a safeguard. Particularly because the US serves as a primary trading partner of so many nations, US macroeconomic volatility is something that must be actively hedged against. Even if the dollar were sound, the current trade practices of the US make a poor recipe for success. Additionally, the unknowability of who we choose to go to war with would make even the most positive political analysts nervous. UBS is able to recognize poor management and it has no reason to give the US a free pass. 

UBS also heavily weighted higher demand from central banks and gold ETFs as a factor in the forecast update. In addition to turning away from the dollar and hedging against US macroeconomic risk, many central banks are just beginning to recognize the value of gold. Rather than printing more money to spur unsustainable growth, many central banks seem to be recognizing that their role is to pursue stability. Of course, their recognition will never do away with the inherently flawed nature of central banks themselves, but at least they are moving away from the failed US model of boom and bust creation. Higher gold reserves stabilize the money supply mechanically, but also through increasing the trust of citizens. An investment in a large amount of gold is a commitment to long-term stability. This commitment becomes rewarded many times over by how much more strongly users of the currency respond to even small changes in policy. Following the same trend as central banks, investors recognize this need for safety and have also begun investing in gold ETFs rather than bonds as the ballast in their portfolio. Gold ETFs have a much higher rate of return than bonds without being linked to the value of currency in the same volatile way. While bonds are recommended by many investment professionals, they would only perform close to gold if the underlying currency was extremely stable. In our current era of fiat currency’s decline, UBS does an excellent job of recognizing how gold picks up the slack.