Gold takes a breather, but leading bank still sees momentum building

Gold may have stalled after hitting an all-time high of $3,500 in April, but UBS thinks this pause could set the stage for another leg higher.

The recent consolidation has come amid a flurry of US economic data, shifting expectations for Federal Reserve policy, and fresh uncertainty around tariffs. Yet despite the volatility, sentiment among investors remains firm.

UBS strategist Joni Teves believes gold continues to stand out as an attractive portfolio diversifier, especially against a backdrop of elevated macro risk. And with summer trading conditions often marked by lower liquidity, the bank notes that any move higher could be sharper than usual.

Physical demand is also holding up. Central bank buying remains steady, exchange-traded fund inflows have resumed, and investor interest in bullion is still healthy. UBS points out that all of this reduces available supply in the market, adding to upward pressure on price.

Elsewhere in the precious metals complex, platinum has been stealing the show. It recently broke through the $1,220 level and is now approaching the psychological $1,300 mark. UBS sees the next technical target at $1,340.

Platinum’s outperformance has sparked speculation that investors may be rotating out of gold and into white metals such as platinum and palladium, which carry more industrial exposure.

The data gives some support to this theory. Open interest in gold futures has declined, while positions in silver and platinum have increased.

Teves also notes a shift in options positioning. Call options in gold and silver have seen open interest fall, while platinum call positions have grown. This could reflect rising interest in platinum among traders anticipating further upside.

Whether the strength in white metals is coming at gold’s expense remains to be seen. But UBS is clear that the structural case for gold remains intact. The recent pause may simply be a calm before the next breakout.

The news outlook is a positive one for FTSE 100 stocks such as Endeavour Mining PLC (LSE:EDV, TSX:EDV, OTCQX:EDVMF) and Fresnillo PLC (LSE:FRES).

It also bolsters the prospects for mid- and small-cap producers such as Pan African Resources PLC (AIM:PAF, OTCQX:PAFRY, JSE:PAN), Caledonia Mining Corporation PLC (AIM:CMCL, NYSE-A:CMCL) and Ariana Resources PLC (AIM:AAU).

For Greatland Gold PLC (AIM:GGP, OTC:GRLGF) it underpins further the economics of its giant Havieron mine in Western Australia along with its Telfer operation.