UBS Sees Gold at $5,400 by 2027 Despite Hawkish Fed Rate Hike

Key Takeaways

• UBS expects higher US real yields and a stronger dollar to create near-term pressure on gold following the Federal Reserve’s September rate increase.
• The bank maintains its longer-term bullish outlook, forecasting gold at $4,600 by December 2026 and $5,400 by September 2027.
• Rising global debt, potential Fed rate cuts in 2027, dollar weakness and sustained central-bank purchases underpin the forecast.
• UBS strategist Giovanni Staunovo views a retreat toward $4,000 an ounce as an opportunity to increase gold exposure.

UBS remains bullish on gold despite describing the Federal Reserve’s latest decision as a hawkish rate increase that could temporarily strengthen the dollar and raise the opportunity cost of holding bullion.

The bank expects gold to reach $4,600 an ounce by December 2026 before advancing through a series of targets culminating at $5,400 in September 2027. That would represent an increase of approximately 24% from the metal’s level around $4,350 on September 18.

UBS strategist Giovanni Staunovo warned that gold could remain volatile in the near term, particularly if higher real interest rates trigger profit-taking in gold-backed exchange-traded funds. However, he argued that the widely anticipated Fed decision does not undermine the structural factors supporting long-term demand.

Hawkish Fed Hike Creates Short-Term Pressure on Gold

The Federal Reserve raised its target interest-rate range by 25 basis points to 3.75% to 4% on September 16, ending a three-year period without an increase.

The decision was unanimous. In its policy statement, the central bank said economic activity continued to expand at a solid pace, while domestic spending, employment and capital investment remained resilient. Policymakers also said inflation was still elevated and that tighter policy would help restore price stability.

Updated projections indicated that most Fed officials expect at least one additional rate increase during 2026. The possibility of further tightening matters for gold because the metal does not generate interest income. Rising real yields make bonds and cash instruments relatively more attractive, while higher US rates can support the dollar and increase the cost of gold for international buyers.

Staunovo described the September move as a hawkish increase that brought the Fed’s extended policy pause to an end. According to UBS analysis reported by Investing.com, elevated real yields and a stronger dollar are likely to remain obstacles for bullion over the near term.

Gold nevertheless remained relatively resilient after the decision. Spot prices rose approximately 0.3% to $4,352.15 an ounce during early Asian trading on September 18, supported by lower oil prices and an easing in Treasury yields. The Wall Street Journal reported that investment sentiment remained supported by higher ETF holdings and continued central-bank demand.

August Gold ETF Inflows Could Face a Test

Gold-backed ETFs attracted substantial investment before the Fed meeting.

Global funds added $18 billion in August, the second-largest monthly inflow by value on record. Their combined holdings increased by 121 tonnes to an all-time high of 4,189 tonnes, while assets under management rose 16% to $615 billion.

North American funds attracted $7.7 billion, their third-largest monthly inflow, while European funds posted a record $7.9 billion increase. Asian-listed gold ETFs added another $2 billion.

The World Gold Council attributed the surge to concerns about fiscal sustainability, currency-market intervention and the long-term purchasing power of the dollar. Positive price momentum also encouraged investors to rebuild exposure after an earlier correction.

UBS warned that some of those positions could now be vulnerable to withdrawals. Investors who bought gold in anticipation of threats to Fed independence or continued monetary uncertainty may take profits if the central bank restores confidence in its ability to control inflation.

A sustained rise in real yields would increase that risk. ETF outflows could amplify downward price moves because physically backed funds must reduce their bullion holdings when investors redeem shares.

However, August’s record holdings also show that institutional demand has broadened. Even if tactical positions are reduced, long-term allocations motivated by debt, currency and geopolitical concerns may remain in place.

UBS Says the Long-Term Gold Case Remains Intact

UBS argues that the September rate increase was already reflected in market pricing and therefore does not fundamentally change gold’s longer-term outlook.

Staunovo identified several structural drivers that could sustain investment demand:

• Continued growth in global government debt and fiscal deficits;
• Expectations that the US dollar will weaken over the medium term;
• The possibility that the Fed will begin cutting rates in 2027;
• Persistent geopolitical and sanctions-related risks;
• Demand for reserve assets that are not liabilities of governments or financial institutions.

Gold has also performed more strongly than traditional interest-rate valuation models might suggest. The metal has remained elevated even as real yields increased, indicating that Fed policy is only one part of the market’s pricing framework.

Concerns about access to foreign reserves have become particularly important. Governments facing geopolitical or sanctions risks may prefer gold because it can be held directly and does not depend on another country’s promise to pay.

Questions surrounding US fiscal sustainability are also encouraging investors and reserve managers to diversify away from concentrated dollar exposure. UBS expects those trends to persist even if gold experiences a short-term correction.

Central-Bank Purchases Provide Structural Support

Official-sector demand remains a central pillar of the UBS forecast.

The People’s Bank of China purchased approximately 20 tonnes of gold in August, its largest monthly addition since 2023. The increase extended China’s buying streak to 22 consecutive months.

The National Bank of Poland and the Central Bank of Uzbekistan each added approximately eight tonnes during the month. Purchases by emerging-market central banks reflect broader efforts to diversify reserves and reduce dependence on dollar-denominated assets.

UBS expects global central banks to purchase between 750 and 1,000 tonnes of gold annually. That level of demand would absorb a substantial share of mine supply and help support prices during periods of weaker private investment.

The longer-term outlook is reinforced by a World Gold Council survey in which 89% of participating reserve managers said they expected global central-bank gold holdings to increase over the following 12 months. A record 45% expected their own institutions to add gold.

Unlike ETF demand, which can react quickly to changes in yields and investor sentiment, central-bank purchases typically reflect multi-year reserve strategies. This makes official buying a potentially more stable source of support.

Track Gold Prices. Trade 24/7.

Stay connected to Gold price movements around the clock with Markets.com. Trade Gold CFDs 24/7 and, if eligible, unlock up to $5,000 in combined new-client rewards. Trade Gold CFDs now.

UBS Gold Price Forecast Through September 2027

UBS has published a series of progressively higher targets extending over the next 12 months.

The December target implies that UBS expects gold to recover from any immediate post-Fed weakness before the end of the year. The subsequent projections assume that dollar weakness, central-bank buying and expectations of eventual monetary easing become more influential during 2027.

The $5,400 target would represent a gain of approximately 24% from gold’s September 18 level near $4,350. It would also take bullion back toward its previous record territory after the recent correction.

UBS had already projected gold at $4,600 in December, $5,000 in March and $5,200 in June before the September Fed decision. Maintaining those targets indicates that the bank regards the policy tightening as a temporary obstacle rather than a change to the broader investment case.

Is $4,000 a Buying Opportunity?

Staunovo said a decline toward $4,000 an ounce could provide an opportunity to add gold exposure.

Such a retreat would represent a correction of approximately 8% from the September 18 price. It could occur if the dollar strengthens, Treasury yields rise further or investors withdraw part of the money added to ETFs during August.

The outlook would become more challenging if the Fed delivers several additional rate increases, real yields remain elevated throughout 2027 or central-bank purchases slow substantially. A durable improvement in US fiscal conditions could also weaken demand for gold as a hedge against debt and currency risks.

UBS does not expect those developments to eliminate the longer-term drivers of the market. Instead, the bank sees potential weakness toward $4,000 as a tactical correction within a broader bullish trend.

For now, gold is caught between restrictive monetary policy and unusually strong structural demand. The Fed’s hawkish turn may limit near-term gains, but UBS believes rising debt, reserve diversification and eventual US rate cuts can ultimately push bullion toward $5,400 by September 2027.