TLDR
- UBS forecasts gold will hit $5,000 per ounce in the first half of 2027
- Gold jumped 2.3% on Friday after the US economy lost 23,000 jobs in July
- Gold gained more than 7% for the week, its best weekly gain since January
- Chinese investors and ETF inflows have been key drivers of the recent rally
- The People’s Bank of China has bought gold for 21 straight months
Gold prices surged on Friday after a weak US jobs report cooled expectations of a Federal Reserve rate hike. The precious metal climbed 2.3% to $4,340.70 per ounce, its highest settlement since June 17.
The Bureau of Labor Statistics reported the economy lost 23,000 jobs in July. That was well below the expected gain of 85,000 jobs.
The report also revised earlier months downward. June’s job gains were cut to 20,000 from an initial estimate of 57,000, and May’s figure dropped to 63,000 from 129,000.
Traders reacted quickly to the data. The probability of a September rate hike fell to 42% from 57% before the report, according to CME Group’s FedWatch tool.
UBS Sets $5,000 Price Target
UBS chief investment officer Ulrike Hoffmann-Burchardi said in a note that gold’s rally has support. Her team expects prices to reach $5,000 per ounce in the first half of 2027.
UBS said it expects inflation to gradually moderate, allowing the Fed to hold rates steady this year before cutting in 2027. Lower rate expectations would reduce real yields, weigh on the US dollar, and boost investment demand for gold.
The bank said price dips toward $4,000 per ounce could be opportunities to build long-term positions.
Near-term risks include oil prices rising or markets pricing in a more aggressive Fed rate path. Either scenario could make bonds more attractive and pressure gold prices.
Central Banks and Chinese Buyers Fuel Demand
Central bank buying has been a steady support for gold. The People’s Bank of China has purchased gold for 21 consecutive months.
In July, the PBOC bought 20 tons of gold, its largest monthly increase since October 2023, according to the World Gold Council.
Chinese investors and exchange-traded fund inflows have also played a role in the recent price rise.
Silver also moved higher on Friday, gaining 3.1% to $63.33 per ounce. That was silver’s best settlement since June 22.
For the week, gold gained 7.2%, its best weekly performance since the week ending January 23. Silver surged 10% for its best week since late February.
Gold prices are roughly flat for the year to date, after jumping more than 65% in 2025.
Markets will now watch next week’s US CPI inflation report. Oil prices are also being tracked, with no deal yet between the US and Iran following the conflict that began in late February.
The SPDR Gold Shares ETF and related gold funds saw continued inflows alongside the price move.
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