UBS has raised its gold price forecast for the end of 2025 to $3,800, an increase of $300 from their previous estimate. For mid-2026, the forecast now stands at $3,900, up by $200. Central banks are likely to continue supporting gold prices, with expected purchases between 900 and 950 tons this year. This is slightly lower than last year’s total of just over 1,000 tons. UBS remains interested in gold and recommends a mid-single-digit percentage allocation in global asset portfolios.

Potential Risks And Strategic Views

One risk to this outlook is the possibility of the Federal Reserve raising interest rates due to unexpected inflation. UBS still sees gold as an attractive asset, noting its strategic role in asset allocation. With the gold price forecast for 2025 set at $3,800 and a further increase to $3,900 by mid-2026, we believe maintaining a long position in gold derivatives is the right move. In the upcoming weeks, traders should think about establishing or adding to bullish positions via options or futures contracts. This optimistic view is supported by strong and steady buying from central banks, which creates a solid price support. The latest World Gold Council data for the second quarter of 2025 shows that global central banks added 235 tons to their reserves, continuing the trend from 2024. This institutional demand is expected to mitigate any short-term selling pressure. However, we must keep an eye on the possibility of the Federal Reserve raising interest rates in response to inflation surprises. The recent August 2025 CPI report confirmed core inflation at 3.4%, still higher than the Fed’s target. Consequently, any positions should be carefully managed ahead of the Fed’s meeting on September 24th.

Strategic Trading Recommendations

Given this risk, we suggest using options to create trades with defined risk. A practical strategy would be to buy bull call spreads on the December 2025 gold futures. This would allow for profit if prices move toward the $3,800 target while limiting potential losses if the Fed takes a more aggressive stance than expected. This approach keeps us positioned for long-term gains while safeguarding capital from sudden rate changes. Looking back, the environment is similar to the period from 2022 to 2024, when ongoing inflation and geopolitical uncertainties sparked a significant gold rally, despite rising interest rates. Historical evidence indicates that strong demand can outweigh concerns about monetary policy, so we should view any price dips before the Fed meeting as buying opportunities. Create your live VT Markets account and start trading now.

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