Surge in Gold Price Will Be Short-Lived, UBS Strategist Says

The gold price once again is on a rise amid escalating pressure from the tension between Russia and Ukraine after the Russian President Vladimir Putin announced a decree to recognize the two breakaway regions of eastern Ukraine and began the advancement into the region to “keep the peace”.

As volatility is high in the stock market and other risk assets, leading to a surge in gold price after gold spot rose 39% in a stretch of five month to reach a record high of $2,063 per ounce in August 2020, when the Covid-19 outbreak was tormenting the world and stock markets plunged to the level of the 2008 financial crisis.

After hitting a record high in 2020, the rally began to slow down as the Covid-19 situation was better and pharmaceutical companies were rolling out their Covid-19 vaccine at the end of December 2020. Gold spot hit its new low at $1,673 per ounce in March 2021 and has been ups and downs ever since.

The price hit $1,912 on February 22, 2022, a huge jump considering gold was trading at around $1,800 at the beginning of February, as investors were pulling out of the stock markets and seeking shelter under a safe asset like gold after the latest move by Russian forces in entering Donetsk and Luhansk regions, pro-Russian separatists regions in eastern Ukraine.


Despite an uptrend in gold price, UBS strategist Joni Teves does not expect the surge to last long. In an interview with CBS on Tuesday, he said that we (UBS) are expecting gold prices to head lower towards the end of this year, thinking that this strength should ultimately be short-lived.

The statement made by its strategist was in line with UBS’ analysis last October where the Swiss investment bank predicted the price to gradually decline, hitting $1,700 per ounce by the end of March, $1,650 by June, and around $1,600 by the year’s end.

The current surge in gold price was due to a conflict between Russia and Ukraine, but the surge will be followed by a cooling period as investors will turn to other desirable assets, according to the strategist from UBS.