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Gold Surges Amid Tariff Concerns: UBS Raises 12-Month Forecast to $3,000 per Ounce



UBS Forecast Adjustment

Strategists at UBS have raised their 12-month forecast for gold to $3,000 per ounce, up from the previous target of $2,850. This adjustment comes in light of gold’s recent rise to record highs, reinforcing its enduring appeal as a reliable store of value and hedge against global uncertainties.

Recent Gold Price Trends

On Wednesday, gold for April delivery settled at a record $2,893 per ounce on Comex, marking its third consecutive record-high settlement. Despite this bullish streak, prices dipped slightly on Thursday by $16, or 0.6%, to $2,877 per ounce.

Key Drivers Behind the Surge

UBS attributed the rally to several factors:

  1. Tariff Concerns: Geopolitical and trade tensions have fueled market jitters.

  2. Central Bank Buying: Sustained demand from global central banks continues to bolster gold prices.

  3. Extended Rate-Cutting Cycle: Prolonged periods of low interest rates are driving investors toward safe-haven assets.

  4. Elevated Uncertainty: Economic and political uncertainties are prompting increased investment in gold.

The World Gold Council highlighted in a recent report that central banks extended their gold-buying streak to a 15th consecutive year in 2024, with expectations for continued strong demand throughout 2025.

Gold and Silver Stocks Hit New Highs

As gold prices climb, several gold and silver mining stocks are also reaching fresh highs, driven by investor interest and market trends.

Notable Performers

  1. Gold ETF (NYSE-Traded):

    • Performance: Up 19.7% from its June 2024 low of $212 to the current $264.

    • Moving Averages: Both the 50-day and 200-day averages are in uptrends.

  2. South African-Founded Miner:

    • Market Cap: $477 million

    • P/E Ratio: 7.61

    • Dividend Yield: 0.16%

    • Recent Activity: A breakout above October 2024 resistance with a positive moving average crossover.

  3. Franco Nevada (Toronto-Based):

    • Market Cap: $27 billion

    • Earnings Decline: 13.15% in 2024

    • Debt-Free: No long-term or short-term debt

    • Dividend Yield: 1.03%

    • Moving Averages: Both 50-day and 200-day are trending upward.

  4. Kinross Gold (Canadian Miner):

    • Market Cap: $14.51 billion

    • Earnings Growth: 71% in 2024

    • P/E Ratio: 19.74

    • Debt-to-Equity Ratio: 0.26

    • Dividend Yield: 1.02%

    • Breakout: Recent surge above July 2024 resistance levels.

  5. Discovery (OTC and Toronto-Traded):

    • Market Cap: $433 million

    • Volume: Average daily volume of 237,000 shares

    • Assets: High-quality gold operations in Canada and a significant silver deposit in Mexico

Underperforming Majors

Interestingly, major industry players Newmont Mining and Barrick Gold have yet to hit new 52-week highs, although recent trading activity shows signs of improvement.

Conclusion

The ongoing surge in gold prices underscores its critical role as a safe-haven asset amid economic uncertainty and geopolitical tensions. With UBS raising its forecast and central banks maintaining strong demand, gold is positioned for a potentially robust year ahead. Investors seeking to capitalize on this trend may find opportunities in both gold and silver stocks, which continue to outpace industry heavyweights.

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