UBS Bank clarifies its expectations for gold prices and anticipates steady inflation and an increase in US debt.

Analysts at Swiss investment bank UBS clarified on Thursday that they expect the price of gold to reach $2,900 per ounce by the end of 2025, noting that they also anticipate steady inflation and a significant increase in U.S. debt.

The key economic forecasts mentioned by the bank's analysts that they believe will impact gold prices are:

• Increased demand for gold from central banks is expected to boost the price of the precious metal.
• Lower interest rates and rising U.S. debt will drive gold prices higher over the next year.
• We expect inflation to remain relatively stable in the near term, while we see rising prices as a persistent issue over the next decade.
• We believe that major trends such as increasing deficits, a retreat from globalization, and carbon emission reductions will be among the fundamental factors driving high inflation in the coming decade.
• We anticipate U.S. inflation will reach 3% by the end of 2024, 2.6% by the end of 2025, and 2.5% throughout 2027. All of this is well above the Federal Reserve's target of 2%.
• Trump's protectionist policies, such as tariffs and other trade restrictions, are likely to raise costs for consumers and businesses, slow global economic growth, and ultimately increase inflation.
• Increased regulatory pressures worldwide for transitioning to green energy; where limited natural resources, environmental taxes, insurance costs, and legal restrictions will create a higher energy cost environment, potentially leading to increased inflation across all sectors of the economy.

Ultimately, UBS recommends increasing exposure to gold, citing the following factors:

• Gold will serve as a good hedge against geopolitical risks, rising U.S. debt, and political changes.
• Gold prices are expected to reach $2,900 per ounce by the end of 2025.
• The trend of increasing U.S. national debt, rising demand from central banks worldwide, and lower interest rates are all factors that will support rising gold prices.