Gold Price Forecast Soars To $2,800 By 2025 On Market Shift: Analysts

UBS has once again adjusted its price target for gold, forecasting a bullish trend in the coming years. The bank anticipates gold to reach $2,800 per ounce by the end of 2025, driven by macroeconomic uncertainty, geopolitical risks, and increased allocations to gold. This update comes ahead of the Bank of Canada's June meeting, which is expected to announce a rate cut almost a year after its last interest rate change.

“We have made significant changes to our price forecast based on the view that there is a structural shift underway in the market,” UBS analysts noted, according to the Market Index report. “We have seen strong official sector gold purchases and resilient physical demand, effectively creating a level shift higher in gold’s trading range.”

UBS has highlighted several key drivers for the anticipated rise in gold prices. These include softer U.S. economic data and continued geopolitical uncertainties. The bank’s analysis points to weaker economic indicators in the US, which have influenced expectations for Federal Reserve rate cuts. Furthermore, geopolitical risks like ongoing conflicts and trade tensions continue to bolster gold's appeal as a safe-haven asset.

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UBS also predicted an increase in investors’ gold allocations. “The private wealth community and long-term investors have yet to get fully involved—consensus upgrades to add gold or increase gold allocations could be the catalyst for the next leg higher,” the analysts said.

Beyond the price of gold itself, UBS also identifies value in the gold mining sector. Given strong balance sheets, high free cash flow yields, and aging assets across many mining companies, they predict a surge in merger and acquisition (M&A) activity.

“Record highs for both USD and AUD gold prices, coupled with healthy balance sheets and aging asset bases, suggest a potential for increased M&A activity as companies seek to replenish pipelines and explore project consolidation,” the report noted. This consolidation could lead to a more efficient and productive gold mining industry.

Several gold miners received significant target price upgrades from UBS. Specifically, Northern Star NSTCU saw its price target rise from $15.00 to $18.50, Genesis Minerals GSISF from $2.00 to $2.30, and SSR Mining SSRM from $8.00 to $10.20.

In addition to gold, UBS has raised its price forecast for silver, driven by rising industrial demand and a potential undersupply. The Silver Institute reports that total industrial demand is expected to rise 9% to 711 million ounces, particularly driven by the photovoltaic sector. However, production will likely fall due to temporary mine shutdowns in Peru, contributing to the metal’s price appreciation.

This bullish outlook coincides with rising financing activity in the gold sector. Per S&P Global report, gold financing reached a four-month high in April, with the number of transactions reaching its highest level in eleven months.

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