UBS vs. The Crowd: Why the Bank is Bullish on Gold

In the midst of a market panic, it pays to watch what the “smart money” is doing. While retail investors and hedge funds are dumping gold, sending the price down to $4,033, analysts at UBS are holding firm. Giovanni Staunovo of UBS predicts that gold prices will “bottom out soon” and recover, citing strong buying from central banks.
This divergence is telling. The crowd is reacting to short-term fears about interest rates and liquidity. The central banks are reacting to long-term fears about currency stability and geopolitics. UBS is betting that the central banks are right.
The bank’s view stands in contrast to the bearishness surrounding crypto and tech. While they acknowledge the risks in those “irrational” sectors, they view gold as a separate asset class that will benefit when the Fed inevitably cuts rates to save the economy.
This suggests that the current dip in gold is a buying opportunity for those with patience. While the crypto market’s $1 trillion loss may be permanent wealth destruction, gold’s decline is viewed as a temporary fluctuation in a secular bull market.
For investors, the choice is between following the panicked herd or the strategic central planners. UBS suggests the latter path is the profitable one.