Gold's rally 'has support', with prices set to rise toward $5,000 next year, UBS says

UBS analysts are making the case for gold prices ( GC=F ) to rise, with the once-high-flying precious metal rallying over the past week.

Gold futures jumped 2% on Friday after a weaker-than-expected monthly jobs report reduced the likelihood of a Federal Reserve rate hike this year. The precious metal has gained more than 8% over the past five sessions, according to Yahoo Finance's AlphaSpace data .

Much of the rally has been driven by increased buying from Chinese investors and continued inflows into exchange-traded funds (ETFs).

Recent moves by the United States and Japan to shore up the yen also eased fears of a sell-off in US Treasurys, which would have driven bond yields higher, creating a backdrop that's typically a headwind for precious metals.

"Gold's rally has support," UBS chief investment officer Ulrike Hoffmann-Burchardi and her team wrote on Thursday. "We expect gold prices to rise toward USD 5,000/oz in the first half of 2027."

Gold prices have declined since the war in Iran broke out at the end of February. Although the UBS strategists see near-term risk if oil prices rise or markets price in a more hawkish Federal Reserve rate path, making bonds more appealing, they're bullish medium to long term on prospects for the precious metal.

Hoffmann-Burchardi said her team expects inflation to gradually moderate, allowing the Fed to hold interest rates steady this year before resuming easing in 2027.

"This should create a more favorable backdrop for gold, as a shift toward lower policy-rate expectations would likely reduce real yields, weigh on the US dollar, and help boost investment demand for gold," they said.