UBS(US:UBS) Hua Er Jie Jian Wen·2026-01-06 03:49Core Viewpoint - UBS maintains a long-term bullish outlook on gold, targeting $4,750 per ounce, but raises short-term caution due to insufficient momentum in recent price increases and heightened volatility [1][20]. Group 1: Short-term Concerns - The recent surge in gold prices is attributed to the performance of silver, platinum, and palladium rather than independent bullish factors for gold itself [1][11]. - Gold's volatility has surged to levels seen at the onset of the Russia-Ukraine conflict, diminishing its appeal as a "safe haven" asset in private investment portfolios [1][6]. - The relationship between gold and real interest rates has broken down, indicating a potential for price correction in the absence of new market stimuli [1][5]. Group 2: Market Dynamics - The current gold volatility is linked to historical data suggesting that high volatility often correlates with lower future returns [6]. - The gold-silver ratio has dropped to around 65, historically indicating weaker performance for both gold and silver in the following three months [14]. - UBS highlights that when investors aggressively pursue silver, it often signals an overheated market that requires cooling [16]. Group 3: Long-term Outlook - Despite short-term risks, UBS believes conditions for a significant decline (over 20%) in gold prices are not present, as historical patterns show such declines are typically accompanied by decreased stock market volatility and rising credit spreads [17][20]. - Key support factors for gold's long-term bullish trend include central bank purchases, stable ETF inflows, and the undervaluation of gold mining stocks [20][22][27]. - Emerging market central banks, which hold only 7-11% of their reserves in gold, are expected to continue buying during price corrections, providing support for gold prices [20].