UBS thinks dip buyers are coming forward to support gold at this level

UBS thinks gold could soon test the $4,000‑per‑ounce support line again. The bank also believes that buyers who step in on the dip will build a solid base around that price.

Strategist Giovanni Staunovo wrote in a Friday note that gold slipped as U.S. real yields rose and the dollar strengthened. Those steps make it expensive to capture metal.

“Nonetheless, we think gold has proven remarkably resilient to a sharp rise in yields,” Stounovo said.

UBS says gold's reaction to real rate changes has softened. This tells us that structural demand is doing more of the heavy lifting than in earlier cycles. The bank gives some reasons:

• Central banks are adding gold to diversify their reserves.
• Growing concerns about the public debt and the cost of servicing that debt.
• It is expected that the dollar will gain some strength over time.
• Strong buying by Chinese investors.

Preliminary data suggests central bank purchasing remained strong in September. UBS still estimates central banks will buy 750 to 1,000 metric tons of gold this year.

"In the near term, gold may seek support around US$4,000 an ounce, where we expect structural downside buyers to establish a floor," the strategist wrote.

As markets reconsider how much more tightening the Fed can do, UBS expects gold to get a boost from lower real yields. The bank believes that the metal will remain stable and turn bullish again by the end of the year and remain strong through 2027.

“Overall, we believe the long-term investment case for gold remains positive,” Stounovo said. “In our view, price movement towards US$4,000/oz provides opportunities for risk-on enhancement.”

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Key tips for gold traders

• Gold may soon test the $4,000 per ounce support level again.
• Structural dip buyers are likely to set a floor at that price.
• Central bank purchases are expected to remain strong at 750‑1,000 metric tons annually.
• Lower real yields and a weaker dollar could push gold prices higher through the end of the year and into 2027.
• The pullback to $4,000 provides an opportunity for long-term investors to add exposure.