What role can gold play in portfolios

10 August 2026, 12:58 UTC Chief Investment Office GWM Investment Research

What role can gold play in portfolios? UBS House View Briefcase Dominic Schnider, CFA, CAIA, Strategist, UBS Switzerland AG; Giovanni Staunovo, Strategist, UBS Switzerland AG; Jon Gordon, Strategist, UBS AG Hong Kong Branch; Christopher Swann, Strategist, UBS Switzerland AG

Key message New this week Gold rose 7.4% last week, its strongest weekly gain since January, Gold rose 7.4% last week, its strongest weekly supported by reduced expectations for near-term Fed rate hikes and gain since January. China’s central bank added central bank buying. Near-term volatility may persist as investors nearly 20 metric tons of gold in July, its largest assess US data, oil prices, and Fed commentary. But we continue to monthly increase since late 2023. see gold as a strategic portfolio hedge and would use weakness to build exposure. One liner Gold’s renewed momentum and durable

01 Gold has regained momentum. medium-term supports reinforce its role as a strategic hedge, and we would use periods of • Gold rose 7.4% last week and climbed above USD 4,250/oz, weakness to build exposure. breaking out of its recent USD 4,000-4,100/oz range.

• Reduced expectations for near-term Fed rate hikes, reported Did you know? Chinese institutional buying, and gold ETF inflows supported the rally. • Central banks bought 289 metric tons of gold in the second quarter, providing an • China’s central bank added nearly 20 metric tons of gold in July, its important source of demand even when largest monthly increase since late 2023. private investment and jewelry demand were uneven.

02 But the near-term outlook may remain volatile. • We estimate that central banks will purchase 750-1,000 metric tons of gold this year as • July consumer price index data later this week will be an important reserve managers continue to diversify away test of whether underlying inflation is continuing to moderate. A from US dollar assets. stronger-than-expected reading could revive concerns about near- term Fed rate hikes. • Gold does not generate income, so changes in real yields can affect demand by changing • Oil prices and Fed commentary will provide additional signals. the opportunity cost of holding the metal. Renewed energy-price pressure or a more hawkish message from officials could reinforce expectations for tighter monetary policy. Investment view • That would matter for gold through real yields and the US dollar. Higher real yields increase the opportunity cost of holding a non- We see gold as a strategic hedge within an yielding asset, while renewed dollar strength would create an investment portfolio. We believe a mid-single- additional headwind. digit portfolio allocation may be appropriate for investors with an affinity for gold. We expect

03 Despite these potential headwinds, we continue to see gold as a strategic portfolio hedge. gold to rise toward USD 5,000/oz in the first half of 2027 and would view periods of weakness • We expect gold to rise toward USD 5,000/oz in the first half of toward USD 4,000/oz or below as potential 2027 as lower rate expectations reduce real yields and weigh on opportunities to build exposure. the US dollar.

• Central bank demand and diversification away from US dollar assets provide additional support.

• We would view dips below USD 4,000/oz as opportunities to build strategic exposure.

This report has been prepared by UBS Switzerland AG and UBS AG Hong Kong Branch. Please see important disclaimers and disclosures that begin on page 3.

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