Commodity Talk: Gold has more room to run and potential for stronger diversification, says UBS’ Joni Teves

We remain bullish on gold and think diversification should continue to drive prices higher. We don’t think positioning is crowded and there is plenty of room for investors to continue building gold allocations, says Joni Teves, Precious Metals Strategist at UBS Investment Bank. She thinks risks are skewed to the upside for gold, with the potential for even stronger diversification, especially if investors reallocate away from US assets into alternatives like gold.

Q: The world seems to be a little less uncertain now with the US-China tariff truce, India-Pakistan ceasefire and other things. Do you think UBS’s gold price target of $3,500 is achievable and sustainable in 2025?

We remain bullish on gold and think diversification should continue to drive prices higher. We don’t think positioning is crowded and there is plenty of room for investors to continue building gold allocations.

Q: Gold prices have fallen by over 7% ($250) from their peak and are trading around $3,230 per ounce on the COMEX. Do you see the weakness to continue in the short term and what level could be hit on the downside?Price action is very headline driven at the moment. There is scope for consolidation over the Northern Hemisphere summer months, but we expect the market to be well supported over all. Interest to buy dips remains high in our view.

Q: The demand for gold has been coming from various quarters like central banks, funds and retail investors and in that context do you think supply and demand are evenly matched and if there is a gap, can you quantify that?

There has been an increase in demand for gold across the board, but limited supply response – there is no material hedging from producers and scrap flows are limited by expectations of even higher prices ahead. Q: How are you seeing credit rating cuts for the US by Moody’s, Fitch and others and can it take the prices even beyond your targets?We think risks are skewed to the upside for gold, with the potential for even stronger diversification, especially if investors reallocate away from US assets into alternatives like gold.Q: What should be the strategy to trade gold and given the bullish view you have, how much should the allocation be in one’s portfolio?The appropriate level of gold holdings depends on many factors such as the composition of the portfolio, risk appetite, macro view, etc.

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