CIO thinks investors should add gold to portfolios as a source of return and as a portfolio hedge. (UBS)

With a soft landing in the US now looking more likely, we expect gold to end 2023 near USD 1,950/oz. Conditions next year should offer more upside, with spot prices expected to climb as high as USD 2,200/oz by end-September 2024.


Gold's rally has lost momentum in recent months.

  • After testing historical highs in early May, prices moderated to as low as USD 1,883/oz on 17 August on renewed Fed hike fears.
  • Resilient US economic data, higher nominal and real Treasury yields, and a firm US dollar have weighed on the yellow metal.
  • In addition to macroeconomic headwinds, recent data from the World Gold Council showed a normalization in gold demand.

The yellow metal may continue to tread water for now.

  • In the near term, we see few positive catalysts for gold.
  • Prices are therefore likely to be relatively rangebound around mid-USD 1,900/oz in the short term, in our view.
  • We believe the next leg up in prices requires a revival in exchange-traded fund (ETF) demand after outflows continued in 2Q23. Rebounds have typically occurred just ahead of US easing cycles.

But we still recommend investors position for a higher gold price over the next 12 months.

  • Our forecast is for a gradually weaker US dollar, which should benefit gold. A cooling economy should also support gold prices.
  • We expect gold to trade near USD 1,950/oz by end-December and USD 2,100/oz by end-June 2024.
  • We think investors should add gold to portfolios as a source of return and as a portfolio hedge.

Did you Know ?

  • Gold is typically negatively correlated to the US dollar as a weaker USD reduces the relative cost for foreign purchasers.
  • Gold tends to have a low correlation with traditional assets, with considerably less exposure to business cycles because of its low use in industrial applications (below 10%of total) and significant jewelry purchases driven by Chinese and Indian demand.
  • Gold typically benefits from safe-haven inflows on geopolitical strife. Both the war in Ukraine and US-China frictions do not have a resolution in sight.
  • Gold's relative performance versus the S&P 500 has historically improved significantly during US recessions—a key risk to monitor over the next 12 months.

Investment view

We think investors should add gold to portfolios as a source of return and as a portfolio hedge. We also think selling downside risks in gold can provide an additional source of portfolio income.


Main contributors - Jon Gordon, Wayne Gordon, Giovanni Staunovo


Original report - What next for gold?, 11 September 2023.