The logic of the gold bull market remains unchanged! Undaunted by the Fed’s "hawkish rate hike," Goldman Sachs and UBS maintain their bullish stance

　　Source: Cailian Press

　　Despite the Federal Reserve's "hawkish rate hike" on Wednesday, international banking giants represented by Goldman Sachs and UBS continue to maintain a bullish long-term outlook for gold.

　　On Wednesday, the Federal Reserve raised interest rates by 25 basis points to 3.75%-4.00%, citing strong economic activity, resilient consumption, and persistently high inflation. This was the central bank's first rate hike in more than three years and signaled the possibility of further rate increases ahead. The latest "dot plot" shows that 16 out of 18 policymakers expect at least one more 25 basis point hike by the end of the year.

　　Goldman Sachs has recently abandoned its prediction of a "one-off rate hike" by the Federal Reserve, and now expects another rate increase in October.

　　Typically, higher interest rates tend to dampen demand for non-yielding assets (such as gold) by making interest-bearing assets more attractive.

　　Coincidentally,

　　UBS forecasts: by December 2026, the gold price will reach $4,600 per ounce; by March 2027, $5,000 per ounce; by June 2027, $5,200 per ounce; and by September 2027, $5,400 per ounce.

　　UBS strategist Giovanni Staunovo described Wednesday's Fed rate hike as "a hawkish hike that ended its long pause."

　　Staunovo pointed out that the current context "still puts short-term downward pressure on gold" because higher US real yields and a stronger dollar increase the opportunity cost of holding non-yielding gold. He mentioned that although gold ETFs saw strong inflows in August as markets worried about the Fed's independence and rising debt levels, some funds may exit following the hawkish signals from this week's meeting.

　　Despite the short-term pressure, Staunovo said that this rate decision had been widely expected and would not undermine gold's long-term investment value. The strategist noted that the rising levels of global debt, expectations of a long-term weaker dollar, and the possibility of Fed rate cuts next year all remain important drivers of investor demand; in addition, geopolitical uncertainty is also a supporting factor.

　　Central bank demand still remains a crucial pillar of support for gold prices. Staunovo said he expects annual gold purchases by central banks worldwide to reach 750 to 1,000 metric tons, providing "significant structural support" for gold prices.

　　He also noted that gold's resilience during periods of rising real interest rates suggests that traditional interest rate-based valuation models "only reflect part of the picture."

　　Concerns over the accessibility of reserve assets, sanctions risk, and fiscal sustainability issues are driving parties to gradually reduce their concentration of dollar assets, while gold, as an asset independent from any institutional credit, sees reinforced demand.

"We believe gold's long-term investment outlook remains positive," Staunovo wrote, adding that pullbacks in gold prices to around $4,000 per ounce "provide an opportunity to increase exposure."

Editor: Zhu Henan