UBS INVESTMENT BANK said gold investments in the Philippines are expected to pick up this year, driven by the US Federal Reserve’s easing cycle and a weakening dollar.
“If you look at physical investment demand, it was positive in the first quarter, and that’s helped offset the weakness in jewelry demand. So I would expect that trend to continue,” UBS Investment Bank Precious Metals Strategist Joni Teves said in a briefing on Thursday.
UBS sees gold prices ending the year at $3,500 an ounce, but could hit a low of $3,100 if the Fed turns hawkish.
“Our expectation is that the Fed continues to ease policy rates, given the downside risks to economic growth. That is the key to our bullish gold outlook. The weaker dollar view that we have as well is a factor and that is long-term supportive for gold,” Ms. Teves said.
UBS expects gold to continue to rally this year in the face of uncertainty generated by the Trump administration’s tariffs.
“We have been bullish for some time, and we remain bullish on gold here. We think that the market can continue to rally in this environment where there’s a lot of uncertainty, particularly around tariffs, but also broader macro uncertainty, and persistent geopolitical risks,” she said.
Ms. Teves added that gold prices could be dragged down in Asia by demand for jewelry.
“In general, our view this year would be for jewelry demand to continue being under pressure because of the high prices of gold especially given our bullish outlook but for physical investment in gold to continue to be strong,” she said.
Recent policy changes in China supportive of gold could also boost demand as it improves market sentiment, but Ms. Teves noted the volume of investments coming from that country will not be substantial.
“The announcement earlier this year on insurance companies being allowed to invest up to 1% of their assets in gold, we think is a positive factor or a positive development for the long term in gold. Currently, we don’t think that there’s going to be large volumes coming out of this, but what we think this has done is fueled positive sentiment onshore and there has been strong retail and institutional investor demand for gold in China as evidenced by the sharp rise in Shanghai Gold Exchange trading volumes, high premiums onshore, and large inflows into Chinese gold ETFs,” she said. — Aaron Michael C. Sy