Can gold hold $4,000? Speculative money retreats but long-term buying hasn't left

PANews reported on October 12, citing Yahoo Finance, that despite a stronger U.S. dollar and rising U.S. real interest rates weighing on gold, UBS remains bullish on gold's medium- to long-term outlook, expecting the price to find support near $4,000 per ounce and rise to $5,400 by September 2027. The bank believes the divergence between short-term speculative deleveraging and medium- to long-term allocation demand is key to understanding the current gold price trend.

UBS strategist Giovanni Staunovo noted that rising real interest rates and a firm dollar have raised the opportunity cost of holding non-yielding gold, while non-commercial traders have recently cut net long positions in gold futures and options, adding to downward price pressure. However, gold exchange-traded fund (ETF) holdings remain resilient, with continued inflows in recent weeks, suggesting some investors have not retreated from the gold market in tandem.

This divergence means that speculative deleveraging may push down gold prices in the short term, but it does not necessarily signal a reversal in medium- to long-term allocation demand. UBS also believes that gold has shown stronger resilience than in the past in the face of a sharp rise in U.S. real yields, reflecting that structural demand may be partially offsetting interest-rate pressure. Still, real interest rates and the dollar remain important variables for short-term price moves, and further declines in gold prices cannot be ruled out.