Gold to rally to US$1,900 by the end of 2023: UBS

Tue 22 Nov 22, 11:17am (AEST)
Close-up detail of gold mineralisation in pyrate type rocks at an unknown location
Source: iStock

Key Points

  • UBS updates its near-term gold price forecast with a more bullish view
  • The Fed is forecast to cut interest rates from 5.0% to 3.25% from mid-2023
  • Key gold picks include Northern Star, SSR Mining, Gold Road Resources and De Grey.

UBS says the Fed will begin cutting interest rates in 2023 from 5.0% to 3.25% by year end, pushing gold to US$1,900 an ounce.

"Investors have had mixed feelings towards gold in 2022, in part due to the crosscurrents of rising real rates and a strong dollar (bearish gold) versus high inflation and elevated macro uncertainty (bullish gold)," UBS analysts said in a note last Friday.

Come 2023, UBS offers a few reasons why gold offers value.

Structural reasons to be bullish

UBS analysts identified three structural tailwinds for gold.

  1. "Long-term investors and the official sector are gradually building gold allocations. Central banks in particular have been net buyers of gold for more than a decade now, amid a broader trend of diversifying dollar-denominated reserves."

  2. "The proportion of gold holdings relative to overall assets held by institutional investors remains light."

  3. "Strong physical demand has also been a key factor affecting the relationship between gold and real rates."

2023: The year of rate cuts

The Fed is expected to begin cutting interest rates in the second quarter of 2023, according to UBS.

"In a falling rate environment, gold tends to rally ~19% for every 100bp decline in real rates," the analysts said. "Our expectation is that Fed funds will be cut by 175bp in 2H23, which should benefit gold."

UBS expects to see gold at US$1,900 in the December quarter of 2023 and stay around those levels between 2024-25.

ASX-listed gold miners

Operating conditions remain challenging for gold miners but labour shortages and supply chain pressures may have already peaked, according to UBS.

"We hear colloquially that labour issues are easing and, with more conservative FY23 growth guidance, we believe (broadly revised lower) growth targets are generally achievable," the investment bank said.

The note views Northern Star, SSR Mining, Gold Road and De Grey as key picks within its coverage universe. While Evolution Mining was downgraded to neutral following its recent run.




Target price


Newcrest Mining


$20.65 from $18.40


Northern Star


$11.00 from $9.45


Evolution Mining

Neutral from Buy

$2.70 from $2.35


SSR Mining


$25.20 from $23.20


Gold Road Resources


$1.95 from $1.70


De Grey Mining


$1.45 from $1.25


Regis Resources


$2.00 from $1.70

Source: UBS | Table: Market Index


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Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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