XAU/USD is down over 7% since its 2023 peak in May. Economists at UBS analyze Gold’s portfolio role as the backdrop shifts.

Short-term headwinds unlikely to erode the portfolio case for Gold

The changing backdrop has pushed both nominal and real US yields higher, adding to Dollar strength and undermining Gold’s near-term appeal. But, we don’t think short-term headwinds erode the portfolio case for Gold.

With US recession risks now fading and Dollar strength back, we have cut our year-end Gold forecast slightly to $1,950 and downgraded the precious metal to neutral within our global strategy. 

We still recommend investors build Gold into their portfolios and broadly diversify USD holdings