Gold is shining brighter than anticipated this year, with the current price of $4,000 (€3,437) per troy ounce exceeding all expectations. But will this last?
Gold is currently experiencing a rally for the ages, with the price surge already surpassing its forecasted ceilings for 2026. However, as Wayne Gordon, the head of Investment Advice, Distribution and Research in APAC at UBS, noted on Monocle radio this week, the forces driving today’s “gold mania” are distinct and structural.
“It has been a tremendous rally in gold. In fact, it’s one of the strongest that we have seen in the metal on a year-to-date basis since about 1979,” Gordon told Monocle Radio’s Tom Edwards. While the upswing in the 1970s was largely driven by inflation, the current ascent is fundamentally tied to geopolitics. “The reasons we’re here today started to build at the beginning of the Russia-Ukraine conflict, when we saw a significant shift in the way that banks viewed holding US dollar-denominated reserves,” adds Gordon. “Central banks have continued to buy large amounts of gold since.”
Pedal to the metal: A refiner holds a gold brick in Sydney (Image: David Gray/AFP via Getty Images)
The power of two buyers: central banks and ETFs The price of gold has continued to rise, even with the strengthening US dollar and increased interest rates. This unusual resilience was due to the “level of influence that central banks have had on the price of gold,” says Gordon.
What’s new this year, he adds, is that “a reversal of nearly three years of outflows from exchange-traded funds” has amplified the rally. “At the start of the year, we thought there would be about 400 to 450 metric tonnes of inflows into ETF funds,” he says. “Now we expect that number to be approximately 800 tonnes.”
This combination of renewed investor interest and geopolitical uncertainty has driven prices up roughly 50 per cent year to date. “We think that ongoing political risks, as well as potential further weakness in the US dollar, can lift gold prices even higher,” says Gordon. UBS now has a target of around $4,200 (€3,613) per ounce.
How much gold should investors hold? Gordon says that a mid-single-digit allocation makes sense for most portfolios. “Historically, we have seen that somewhere between 5 to 10 per cent allocation to gold has improved the overall volatility of your portfolio,” he says. “It has protected your portfolio to some degree from more material drawdowns.” He adds that gold still plays a vital role even at higher prices. “There’s no counterparty risk and no credit risk to gold. It is insulated from significant moves in currency.”
This interview has been edited for length and clarity. Listen to the full, detailed conversation on ‘The Bulletin with UBS’ on Monocle Radio.
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(Bloomberg) — A renewed wave of dip buying lifted stocks as the nascent earnings season fueled bets the strength of Corporate America will keep the positive momentum going.
Wall Street brushed aside worries about a trade war to send the S&P 500 up as much as 1.2%. The index later pared gains in a continuation of the move seen as a “healthy reset” after a torrid surge. Big banks rallied on solid results from Morgan Stanley and Bank of America Corp. Positive comments on artificial-intelligence demand from ASML Holding NV boosted chipmakers.
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“Investors who are buying the dip are still driving the action, keeping sentiment firm even as technical indicators show signs of strain,” said Mark Hackett at Nationwide. “Early earnings from the financial sector have surprised to the upside and consumers remain steady, suggesting growth fears may be premature.”
After one of the best six-month stretches for equities since the 1950s, the market has seen brief bouts of profit-taking amid a flare-up in trade tensions. Speaking in a CNBC event, Treasury Secretary Scott Bessent said that as far as he’s aware, President Donald Trump “is a go” on meeting President Xi Jinping later this month.
Longer-dated Treasuries outperformed. Japan’s first sale of government debt since the ruling political coalition crumbled drew firm demand. French bonds surged on optimism budget concessions made by Prime Minister Sebastien Lecornu will help avert a deeper crisis. Gold hovered near a record $4,200.
Read: Bessent Says He’ll Give Trump Fed Chair Options in December
Federal Reserve Governor Stephen Miran said recent trade tensions have increased uncertainty in the outlook for growth, making it more important for policymakers to lower interest rates quickly.
“There’s now more downside risks than there was a week ago, and I think it’s incumbent upon us as policymakers to recognize that should get reflected in policy,” Miran said Wednesday during an event organized by CNBC. Higher uncertainty around trade policies between China and the US have introduced a “new tail risk,” he said.
Despite the recent tariff noise, fundamentals remain strong, according to Max Kettner at HSBC.
“The weak USD should help US equities in the next two quarters. Global top-down consensus expectations have been upgraded since May, although they remain low enough for further potential upgrades in our view.”
Kettner also noted he’s heading into 2026 with a continued “risk-on stance” as short-term US growth expectations look easy to beat.
“The biggest risk to our view heading into 2026 remains higher long-end yields. However, given the much lower starting point now, markets would have to start pricing an end to Fed cuts, if not hikes, and that is a long way off in our view,” he concluded.
“Q3 earnings results are important, but they are backward-looking. What I’ll be watching closely is forward guidance, particularly any signs of optimism,” said Stephen Kates at Bankrate. “Positive guidance can be self-reinforcing for Wall St. and Main St. Rising stock prices boost business and consumer confidence, which in turn, encourages more real-economy spending.”
“The third-quarter earnings season should be supportive of our view that the bull market remains intact driven by the combination of durable earnings growth and Fed rate cuts,” said David Lefkowitz at UBS Global Wealth Management.
Retail traders’ demand for call options has outpaced puts for 24 consecutive weeks, which ties with November 2023 for the longest streak ever, said Citadel Securities’ Scott Rubner, citing data going back to 2020.
Their conviction in the stock market “remains extraordinary,” Rubner wrote in a note to clients.
“Although we believe a consolidation phase is probable as investors focus on Q3 earnings, they should continue to seek opportunities to ‘buy the dip’ as we enter the fourth year of this bull market,” said Craig Johnson at Piper Sandler.
Corporate Highlights:
Morgan Stanley’s stock traders soared past expectations in the third quarter, topping all of its largest rivals as US President Donald Trump’s policies kept markets on edge throughout the period. Shares of the company jumped the most in more than six months. As concerns begin to emerge about the quality of US credit, Morgan Stanley reported a noteworthy figure for loan-loss provisions: zero dollars. Bank of America Corp.’s third-quarter earnings beat estimates as investment-banking activity surged amid a long-awaited comeback in M&A and net interest income topped analysts’ estimates. PNC Financial Services Group Inc.’s more-expensive commercial deposits grew faster in the third quarter, a drag on net interest margin that pushed the bank further from its year-end goal. Walmart Inc.’s US CEO said shoppers are spending at a healthy rate and remain resilient, despite warning signs from banks about the economy. Nvidia Corp. added another bull on Wednesday, as HSBC upgraded the chipmaker to buy from hold, citing the ongoing growth of artificial intelligence. Apple Inc. rolled out updated versions of the iPad Pro, Vision Pro and entry-level MacBook Pro with the new M5 chip, refreshing the products just ahead of the all-important holiday season. Apple is preparing to expand its manufacturing operations in Vietnam as part of a push into the smart home market and an ongoing effort to lessen its dependence on China. ASML Holding NV said demand for its most sophisticated chip-making machines is soaring thanks to the artificial intelligence boom, signaling optimism just months after the semiconductor equipment maker warned the trade war could stymie growth. Meta Platforms Inc. removed a Facebook group used to share information about Immigration and Customs Enforcement agents in Chicago after a request from the Justice Department. Nscale, a data center developer focused on artificial intelligence, has agreed to build a site for Microsoft Corp. in Texas, the fourth such deal between the companies in the last two months. Dollar Tree Inc. projected earnings per share to gain at a compound rate of as much as 15% over the next three years. Papa John’s International Inc. jumped as Reuters reports that Apollo Global Management submitted a bid within the last week to take the pizza chain operator private at $64 per share. AppLovin Corp. said it has shut down a product linked to user and short-seller allegations that apps were being downloaded to mobile phones without consent. Investors led by BlackRock Inc.’s Global Infrastructure Partners agreed to buy Aligned Data Centers in a $40 billion deal, one of the asset manager’s largest infrastructure investments ever that comes as Wall Street races to claim a stake in the artificial-intelligence boom. Lone Star Funds plans to acquire US plastic parts and equipment maker Hillenbrand Inc. in an all-cash transaction valuing the target at around $3.8 billion including debt. Novo Nordisk A/S agreed to pay Omeros Corp. as much as $2.1 billion for rights to an experimental rare-disease drug, as the maker of Ozempic continues to use deal-making to build its pipeline. Abbott Laboratories cut the top end of its 2025 earnings guidance by 2 cents a share, just as the Trump administration launched an investigation into the medical device sector that could lead to tariffs on its biggest product category. Volkswagen AG truck brand Scania AB has opened a €2 billion ($2.3 billion) manufacturing facility in China to supply trucks in the world’s biggest market as well as export to Asia. Ryanair Holdings Plc slashed its winter capacity to Berlin and other German cities by 800,000 seats in a dispute over the country’s aviation taxes and access costs. Waymo is planning to launch its driverless ride-hailing service in London next year, marking its second international expansion and its first in Europe. TotalEnergies SE said its third-quarter profit and cash flow may rise slightly after oil and gas output increased and refining margins jumped from a year earlier, outweighing a drop in crude prices. SMBC Nikko Securities Inc.’s planned integration with Jefferies Financial Group Inc. will likely go beyond just bringing together their equity businesses, with ties also possible in other investment banking areas, its chief executive officer said. Global investors are ramping up bets on Taiwan Semiconductor Manufacturing Co. ahead of its earnings, confident that the world’s leading chip foundry will remain one of the biggest winners from the AI spending boom. How should regulators react to the blurring line between investing and gambling? Let us know in the latest Markets Pulse survey.
What Bloomberg Strategists say…
“Equities couldn’t quite finish the job of rallying from steep opening losses Tuesday, but this morning are in an ebullient mood after ASML’s strong sales figures underscored the strength of AI investment demand. It remains very much a bull market from that perspective, and the evidence of the last couple of years suggests that it will take a steady diet of bad news elsewhere to keep the market down for very long.”
—Cameron Crise, Macro Strategist, Markets Live. For the full analysis, click here.
Some of the main moves in markets:
Stocks
The S&P 500 rose 0.3% as of 1:58 p.m. New York time The Nasdaq 100 rose 0.6% The Dow Jones Industrial Average rose 0.1% The MSCI World Index rose 0.5% Currencies
The Bloomberg Dollar Spot Index fell 0.2% The euro rose 0.2% to $1.1629 The British pound rose 0.4% to $1.3376 The Japanese yen rose 0.3% to 151.34 per dollar Cryptocurrencies
Bitcoin fell 1.7% to $111,149.89 Ether fell 3.1% to $3,990.76 Bonds
The yield on 10-year Treasuries advanced one basis point to 4.04% Germany’s 10-year yield declined four basis points to 2.57% Britain’s 10-year yield declined five basis points to 4.54% Commodities
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The UK has proposed establishing a compensation scheme for victims of a Chinese investment fraud that could allow the Treasury to retain much of a £5bn bitcoin fortune.
The crypto haul is at the centre of a battle at the High Court in London between UK authorities and thousands of Chinese investors who were cheated and who contend the British state should not benefit.
The court heard on Wednesday that the director of public prosecutions, Stephen Parkinson, told victims about the possibility of establishing such a scheme, although details were not provided.
In 2018, police seized 61,000 bitcoin from devices at a mansion in Hampstead, north London. The government is now trying to keep the majority of the haul, which has soared in value in the past seven years and is currently worth about £5bn.
Zhimin Qian, 47, also known as Yadi Zhang, who was wanted by Chinese authorities for masterminding an investment fraud, fled the country after converting much of her investors’ cash into bitcoin.
She and her Malaysian assistant Seng Hok Ling, 47, pleaded guilty to money laundering charges last month at Southwark Crown Court in London. They are due to be sentenced next month.
UK authorities recently obtained access to additional cryptocurrency assets worth about £67mn, the court was told.
Counsel for the CPS, led by Martin Evans KC, said in written submissions that Zhang had last month disclosed access codes and passwords for a ledger and two cryptocurrency wallets.
“The ledger had been found in a purpose-made concealed pocket within a pair of jogging bottoms which [Zhang] was wearing at the time of her arrest,” the written submission said.
Evans told the court that the compensation scheme proposal would provide “adequate protection” for victims.
In a statement following the hearing, William Glover, director at law firm Fieldfisher, representing a group of victims, said: “While there is likely still some distance to go in the proceedings, we are pleased with the outcome of the hearing.
“The DPP has effectively accepted responsibility to create a form of compensation scheme for those who may be unable to seek redress through the existing statutory provisions,” he added.
The CPS said it had maintained throughout the course of legal proceedings that it intended to seek a civil recovery order to compensate victims for their lost investment insofar as they have not otherwise been compensated.
It would consider how all victims could be compensated, not just those participating in the UK legal proceedings.
The bitcoin spoils are so large that some Treasury officials have privately queried whether they could help chancellor Rachel Reeves plug the UK’s fiscal gap — estimated at up to £30bn by 2029 — at her Budget in November.
However, other government officials have cautioned that the haul is likely to be subject to a protracted legal battle, and the Treasury has been told it cannot use it in their calculations.
