UBS and Natixis raise gold targets past $5,000 amid fiscal fears

Gold is heading for its best monthly performance since January 1999, rallying roughly 15% in August, and major financial institutions are racing to raise their price targets as the metal consolidates near three-month highs above $4,600 per ounce.

Natixis analyst Bernard Dahdah lifted the bank's end-2026 gold price forecast from $4,600 to $5,000 per ounce, citing rapidly expanding U.S. government debt — now above $40 trillion — rising long-term Treasury yields, and what he called elevated currency debasement risks. UBS went further in a Tuesday report, projecting gold could surpass $5,400 within 12 months as de-dollarization trends accelerate and fiscal pressures mount.finance.biggo+1

The Debasement Trade Returns

Aakash Doshi, head of gold strategy at State Street Global Advisors ↗ 0.20%, told Kitco News that $5,000 by year-end is "firmly back in play" and that $10,000 gold is "a question of when, not if."kitco

"At State Street, we never thought it was dead; we just thought it was on pause," Doshi said. "And now I think it's alive again."kitco

The renewed bullishness centers on the U.S. Treasury Department's decision to double its 10-year and 30-year bond buyback program to $4 billion, a move that has refocused attention on America's deteriorating fiscal position. Doshi noted that if yields are rising because investors demand higher term premiums to compensate for inflation risk and deteriorating fiscal credibility, then rising yields paradoxically become bullish for gold.finance.biggo+1

Central Banks and ETF Flows Provide Structural Support

Central banks purchased a net 288.9 tonnes of gold in the second quarter, a 62% jump from the same period a year earlier and the strongest second quarter on record, according to the World Gold Council. Poland led with 51 tonnes, while China added 33 tonnes — its largest quarterly purchase since late 2023.ad-hoc-news

Gold ETFs attracted 46.7 metric tons of inflows last week, worth approximately $6.4 billion, the largest weekly inflow in 10 months. SPDR Gold Shares ↘ 0.79% saw holdings rise to 1,049.49 metric tons on August 25, a four-month high.finance.biggo

UBS noted that the People's Bank of China boosted reserves by 20 metric tons in July alone and projected full-year central bank purchases of 750 to 1,000 tonnes in 2026.indexbox

Risks Ahead

COMEX December gold futures settled down $41.20, or 0.9%, at $4,653.30 per ounce on Tuesday after approaching the $4,700 level the previous session. The July PCE price index came in at 3.7% year-over-year, slightly above the 3.6% consensus, boosting bets on a potential Fed rate hike and strengthening the dollar.finance.biggo

Markets now await Fed Chair Kevin Warsh's remarks at the Jackson Hole symposium on Friday. A hawkish signal could pressure gold, while any indication of dovishness or renewed fiscal concerns could propel the metal toward the $5,000 milestone that multiple institutions now expect.ad-hoc-news+1