Stocks may be in for a struggle until Jay Powell steps up to the Jackson Hole podium on Friday. Also paying attention will be gold bugs, ears perked for rate-cut hints from the Fed chief.
Lower interest rates or increasing sentiment for that has tended to work in gold’s favor because it lowers the opportunity cost of holding the asset — lower rates mean less returns on interest-bearing investments like bonds and savings accounts.
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Recent data showing weak jobs numbers and less worrying inflation have driven hopes for a September rate cut, though others warn Powell may try to push back on that this week.
Our call of the day from UBS Global Wealth Management strategists is a bullish one on gold that comes with higher price targets on the asset GC00 that has gained 28% this year, putting it ahead of all major stock and bond indexes, G-10 currencies and even bitcoin.
A team led by Wayne Gordon now expects gold prices, trading at $3,388 on Tuesday, to reach $3,600 per ounce by end March 2026 and to $3,700 by end June 2026, both from $3,500 per ounce previously. They introduced an end-September 2026 target, also at $3,700 an ounce. The strategists are still aiming at $3,500 for the end of this year.
“Despite the dialing back of some trade frictions, we see U.S. macro-related risks, questions over Fed independence, worries about fiscal sustainability, and geopolitics underpinning de-dollarization trends and more central bank buying. In our view, these factors will drive gold prices even higher,” said Gordon and his team.
They say a combination of sticky U.S. inflation — fallout from tariffs and immigration crackdowns have yet to be felt — and below-trend growth will push down real U.S. yields, which will cut that opportunity cost of holding gold.
Headed into 2026, investment demand for gold will be supported by those de-dollarization trends, Fed independence questions and concerns about sustainability of the U.S.’s fiscal position, with midterms looming after September, said the UBS team. They noted that recent World Gold Council data indicated the strongest inflows into exchange-traded funds (ETFs) in the first half of the year since 2010.
The UBS team also lifted their full-year ETF demand forecast to nearly 600 metric tons, from 450, noting that current holdings are still under prior highs. Central bank purchases are also expected to remain strong, though slightly under near-record buying last year.
