UBS Defends Gold Amid Hawkish Fed Shift

UBS continues to support gold, contrary to the hawkish pivot of the Federal Reserve (Fed) that raises real rates and strengthens the US dollar. For UBS, these factors present a temporary hurdle for the commodity but do not warrant an overall reduction in exposure. The institution views gold as a structural hedge against risks that hawkish Fed decisions overlook, such as persistent inflation, geopolitical shocks, and concerns over fiscal and monetary credibility. These perspectives align with Goldman Sachs' recent analysis, which has also maintained a constructive view on gold, suggesting the possibility of US$ 4,000 per ounce in an eventual buying opportunity. UBS extends this same logic to other commodities, highlighting global electrification trends, rising power demand, and investments in AI infrastructure as long-term structural supports. By emphasizing these views, the institution advises investors to prepare for a prolonged period of hawkish Fed decisions, using moments of low gold prices to bolster positions in anticipation of future opportunities.