Gold prices climbed higher on Monday, continuing their rally after briefly breaching the $3,000 mark last week for the first time. Investor focus remains fixed on the upcoming U.S. Federal Reserve meeting and escalating global trade tensions that have fueled safe-haven demand.
Spot gold rose 0.2% to $2,991.13 per ounce as of 0924 GMT, while U.S. gold futures dipped slightly by 0.1% to $2,998.90. On Friday, gold reached an all-time high of $3,004.86, buoyed by heightened geopolitical uncertainty.
"We expect prices to edge higher on a similar trajectory with dips bought as FOMO (fear of missing out) trades support the market," Ross Norman, an independent analyst, said. "In short, we would be surprised not to see the $3,150 level in the coming months much as we had forecasted - albeit much quicker than we had anticipated."
UBS Group AG on Monday revised its price forecast, projecting gold to trade at $3,200 per ounce over the next four quarters, up from its previous target of $3,000. Analysts Wayne Gordon and Giovanni Staunovo pointed to the growing risk of a prolonged global trade war as a key driver of investor appetite for gold.
"In other words, we are seeing a shift from a 'Trump put' to a 'Fed put'," Gordon and Staunovo wrote in a note. They added, "We continue to believe allocating around 5% of a USD balanced portfolio to gold is optimal from a longer-term diversification standpoint."
The bank cited U.S. President Donald Trump's planned reciprocal and sector-specific tariffs, set to take effect on April 2, as a looming risk event likely to sustain safe-haven flows. UBS also highlighted increased demand from bullion-backed exchange-traded funds and central bank purchases, which it described as "crucial" structural support, with annual buying levels potentially reaching around 1,000 metric tons.
Last week, Macquarie Group raised its gold forecast to $3,500 per ounce for the second quarter, while BNP Paribas SA predicted average prices would hold above $3,000.
Meanwhile, U.S. Treasury Secretary Scott Bessent said on Sunday that there are "no guarantees" the U.S. will avoid a recession, amplifying investor concerns over economic headwinds tied to the administration's trade policies.
"Short term, we acknowledge that the market has drifted into technical overbought territory, but think the prevailing mood among investors remains one of caution for U.S. equities and confidence in gold," UBS analysts said in a separate note.
Gold's appeal has been bolstered by expectations that the Federal Reserve will hold interest rates steady at its monetary policy meeting on Wednesday. The Fed has trimmed rates by 100 basis points since September, and traders are closely watching for signals on the central bank's next moves.
Lower interest rates tend to support gold by reducing the opportunity cost of holding non-yielding assets, while geopolitical strife, trade tensions, and economic uncertainty further enhance the metal's safe-haven status.
Spot gold was last up 0.5% at $2,999.55 an ounce in London trading, while the Bloomberg Dollar Spot Index fell 0.2%. Silver prices held steady, and both platinum and palladium saw gains.
