Gold prices are on track to reach $5,000 an ounce by the first half of 2027, according to UBS Group (UBS), as the Federal Reserve prepares to pivot toward lower interest rates and central banks continue to stockpile bullion.
Ulrike Hoffmann-Burchardi, chief investment officer at UBS, and her team laid out the bullish case in a note to clients on Thursday, arguing that the recent 4% rally over the past five trading sessions has solid foundations. Spot gold broke above $4,300 an ounce on Friday, marking its highest level since mid-June, though it remains roughly 23% below the all-time peak of $5,594.82 set in late January 2026.
“Gold’s rally has support,” Hoffmann-Burchardi wrote. “We expect gold prices to rise toward USD 5,000/oz in the first half of 2027.”
The precious metal has been under heavy pressure since the war in Iran erupted at the end of February. The conflict stoked inflation fears across global markets, prompting investors to price in a prolonged period of high interest rates from the Fed. Higher rates typically diminish gold’s appeal because the metal pays no yield, making bonds and other interest-bearing assets more attractive by comparison.
The Fed held its benchmark rate steady in the 3.50% to 3.75% range at its most recent meeting. UBS strategists expect inflation to moderate gradually, allowing the central bank to keep rates on hold through the remainder of this year before resuming its easing cycle in 2027.
“This should create a more favorable backdrop for gold, as a shift toward lower policy-rate expectations would likely reduce real yields, weigh on the US dollar, and help boost investment demand for gold,” the UBS team said.
The recent rebound has been fueled by several factors. Chinese investors have stepped up purchases of the metal, while inflows into gold-backed exchange-traded funds have also provided a tailwind. Additionally, coordinated action by the United States and Japan to support the yen helped ease fears of a sell-off in US Treasurys. Had those fears materialized, bond yields would likely have spiked, creating a significant headwind for gold.
Central bank buying is another pillar of UBS’s bullish outlook. Official sector purchases have been a major driver of gold’s multi-year rally, and the bank expects that trend to continue, effectively establishing a floor under the market.
Still, near-term risks remain. UBS Chief Investment Officer Mark Haefele cautioned that a further spike in oil prices or a more hawkish turn from the Fed could threaten gold in the short run. However, he framed any significant pullback as a buying opportunity rather than a reason to exit positions.
“Periods of weakness toward $4,000/oz or below may ultimately prove to be opportunities to build strategic exposure,” Haefele said.
Gold prices are roughly flat year to date, a stark contrast to 2025, when the metal surged more than 65%. The current environment marks a critical juncture: if UBS’s rate-cut timeline proves accurate, the next leg higher could begin to take shape in the coming months as markets start to price in the 2027 policy shift.
The $5,000 target represents a roughly 16% gain from current levels. For investors who missed the 2025 rally, the message from UBS is clear: the bull market in gold is not over, just pausing.