Swiss Private Bank UBP Resumes Aggressive Gold Buying After Major Sell-Off
Union Bancaire Privée (UBP) has restarted its buying spree of gold bullion, despite a recent decline, maintaining strong long-term bullish conviction. The Swiss private bank is gradually re-adding gold to discretionary client portfolios, having previously cut its exposure by 3% from an initial level of around 10%.This buying move comes after the metal experienced a slump following geopolitical tensions, particularly related to the Iran conflict. Gold had tumbled by around a 10th since the war began, driven by fears of higher interest rates and acute liquidity squeezes that prompted widespread loss-covering sales among traders.
Paras Gupta, Head of Discretionary Portfolio Management in Asia, stated that the bank has taken the initial steps to rebuild its gold portfolios. He noted that the institutional and retail bullion positions are now "quite balanced," indicating a potential turning point for the commodity.
Structural Demand Underpins $6,000 Gold Price Target
Despite the temporary dip, UBP remains bullish, projecting gold prices could reach $6,000 an ounce by the end of the current year. This high forecast is underpinned by several persistent structural factors.These factors include sustained central bank purchases, ongoing concerns regarding fiscal deficits globally, and enduring geopolitical tensions. UBP is aiming to rebuild its gold positions, which consist mostly of bullion-backed exchange-traded funds, after they recovered to approximately 6% of the total discretionary portfolios.
Geopolitical Risk and Inflation Remain Key Drivers
The recent volatility highlights the market's focus on inflationary risks as global energy prices surge. Gold notably fell on Monday after US-Iran peace talks failed to yield a resolution, and the US announced intentions to blockade the Strait of Hormuz.Gupta pointed out that while the risk of inflation is becoming immediately apparent, the macro outlook does not currently suggest a global recessionary scenario.
The bank’s assessment aligns with several other major investment houses, including ANZ Banking Group Ltd. and Goldman Sachs Group Inc., all of whom have recently reinforced their long-term positive view on bullion prices.
Dip-Buyers Step In Amid High Uncertainty
Market data confirms that dip-buyers are actively stepping in to help cushion the commodity’s losses. According to a Bloomberg tally, global holdings in gold-backed ETFs rose by around 20 tons in April, marking a recovery after facing the largest monthly outflows in five years in March.However, the bank cautioned that sustained additional buying requires greater clarity regarding the evolving geopolitical landscape. "The events over the weekend only reinforce the need for more clarity," Gupta added, emphasizing that decisive development is necessary for further strong momentum.
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