Go for gold
We believe gold plays an important diversifying role in portfolios, especially amid political uncertainty.
We expect gold to build on its gains in 2025. Lower interest rates, persistent geopolitical risks, and strong dollar-diversification trends likely see investor and central bank buying continue. Outside gold, we also see long-term opportunities in copper and other transition metals, with demand increasing alongside higher investment into power generation, storage, and electric transport.
Further upside for gold
Further upside for gold
Gold reached new record highs, with the price topping USD 2,790/oz—a year-to-date gain of 35% to 30 October 2024. Since Election Day, the metal has faced modest setbacks, as investors have focused on the decisive nature of Trump’s victory and the potential benefits of Trump’s policies on US stocks.
We expect the de-dollarization trend among central banks and private asset managers to continue. We estimate central banks bought around 900 metric tons of gold in 2024, and we think these volumes can be sustained well above the prior decade’s average of around 325 metric tons a year. Additionally, we see other traditional drivers of gold like lower real interest rates, fading dollar strength, and rising geopolitical uncertainties reasserting themselves in the year ahead.
We think prices could rise to new highs in 2025, underpinned by a step higher in exchange-traded funds inflows; the third quarter saw the strongest net inflows in a quarter since 1Q22.
More in metals
More in metals
Industrial metals have faced headwinds in recent months, as weak economic data from China and fears of a cutback in US climate-related spending have outweighed concerns about longer-term supply shortages. However, in 2025, we believe tightening fundamentals will again support metal prices as the global energy transition continues and the number of new mining projects disappoints. For example, we see copper prices reaching a near-record USD 11,000 per metric ton by end-2025. We also see opportunities in more niche minerals like manganese, rare earths, and lithium. Owing to the complexities of attaining direct exposure, we prefer buying select miners and processors that have exposure to these metals.
Oil: Higher prices on supply disappointments
Oil: Higher prices on supply disappointments
Consensus expects the oil market to be oversupplied next year. But we think that current low prices could lead to lower supply growth than expected in the US. Also, OPEC+ is likely to be cautious about increasing supply if the market cannot handle it, and renewed sanctions on Iran and Venezuela could affect supply.
Meanwhile, solid economic growth, global interest rate cuts, and fiscal stimulus measures should moderately increase oil demand. With financial positioning in oil currently low, we expect moderately higher crude oil prices in 2025 and favor yield-generating strategies that take on the risk that the oil price will not fall below a certain level.
Watch the video
Watch the video
Gold has had an incredible year – its shine brightened by ongoing demand from central banks and geopolitical tensions. But can the forces that propelled gold to new heights keep it shining bright in 2025? UBS GWM CIO APAC Head of Investment Advisory & Content Wayne Gordon discusses investing in gold in the coming year.
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Disclaimers
Disclaimers
Year Ahead 2025 – UBS House View
Chief Investment Office GWM | Investment Research
This report has been prepared by UBS AG, UBS AG London Branch, UBS Switzerland AG, UBS Financial Services Inc. (UBS FS), UBS AG Singapore Branch, UBS AG Hong Kong Branch, and UBS SuMi TRUST Wealth Management Co., Ltd.