Apr 15, 2026, 06:40 AM
- Gold needs falling rate expectations for a substantial rally.
- UBS holds firm on long-term gold forecast of $6,200 per ounce by 2026.
- Yellow metal hedges against monetary risks like currency devaluation.
Investors holding substantial gold positions should consider diversifying their portfolios into other commodities, as assets like gold and oil are expected to maintain significant price momentum even after the conflict in Iran concludes, according to Giovanni Staunovo, a commodity analyst at UBS.
Staunovo published a note earlier this week, analysing how the current Middle East conflict is affecting the commodity sector.
“Continued tensions in Iran and risks in the Strait of Hormuz have added upside pressure to both prices and volatility in commodities, most notably oil,” he wrote.
Commodity upside and diversification call
Staunovo believes there is continued upside potential for commodities, underpinned by strong fundamentals, ongoing supply-demand imbalances, and the presence of geopolitical risks.
For investors, actively managed commodity allocations can serve as a vital hedge against both inflation and shocks to energy supply.
He said that gold prices were currently just under 13% below their all-time closing high in January, with higher rate expectations since the escalation of tensions weighing on sentiment.
Broad commodities have gained around 17% year to date, based on the UBS CMCI Composite total returns index in US dollars.
While the geopolitical risk premium is anticipated to decrease, Staunovo stated that the underlying fundamentals for commodities remain supportive.
Gold prices initially reached a one-month high on Wednesday but were trading slightly lower.
This reversal was driven by a rise in risk appetite, fueled by the prospect of renewed peace talks between the US and Iran.
Additionally, increasing oil prices contributed to ongoing concerns about higher inflation.
At the time of writing, the COMEX gold contract was at $4,839.01 per ounce, down 0.2%.
The contract had hit $4,895.40 per ounce earlier in the day, its highest level since March 19.
UBS forecasts that copper and aluminum prices will be supported over the medium term due to continued supply shortages, while long-term demand is underpinned by structural drivers like electrification.
Gold's failure to materialise as safe-haven asset
UBS commodity analysts updated their risk, interest rate policy, inflation, and strong underlying demand projections on March 16.
Based on this new calculus, they still forecast that the price of gold will reach $6,200 per ounce by the close of 2026.
Analysts observed that gold's expected safe-haven demand has not materialised since the beginning of the Iran conflict, as the metal has consistently failed to surpass the $5,200 per ounce level.
In contrast to last year's 65% surge, which was fueled by fundamental factors like lower real interest rates and debt concerns, along with the tailwind of heightened geopolitical risks, the current period shows a change.
Its latest performance mirrors historical behavior during such events, where investors seek liquidity and consider alternatives like energy assets.
“For instance, gold jumped 15% after the start of the Russia-Ukraine conflict in 2022, but then declined by 15-18% as the Federal Reserve raised rates,” the analysts wrote.
Similar trends emerged during the Gulf War and the Iraq War: initially, prices surged by 17% and 19%, respectively, before declining as geopolitical tensions subsided, UBS analysts added.
UBS's long-term gold forecast
Despite the yellow metal's recent period of sideways movement, the Swiss banking giant remains confident that gold will appreciate by at least another 20% in 2026.
UBS reiterated its projection that gold prices are anticipated to climb, reaching $5,900-$6,200 per ounce this year.
The reasoning is that gold primarily serves as a hedge against the broader economic consequences of conflicts, rather than just direct wartime threats.
Specifically, gold offers protection against monetary risks, such as currency devaluation, increases in deficits, and economic deceleration, which are often consequences of geopolitical instability.
While acknowledging that "higher energy prices and inflation worries have resulted in a stronger US dollar and concerns about possible rate hikes—both of which negatively impact gold prices," the analysts added a caveat.
They anticipate that central banks "will be watchful of inflation risks without implementing knee-jerk policy rate hikes."
Over the longer term, gold stands out as a hedge against inflation.
They said.
