World gold price could rise to 4700 USD if instability persists

World gold prices opened the 4th trading session in Asia with a sharp decrease to around 3,950 USD/ounce. This adjustment took place when traders began to reduce expectations for the possibility of the Fed continuing to cut interest rates in December. Investors are waiting for Governor Michelle Bowman's speech to find more clear signals from the Fed on monetary policy.

Financial markets are pricing in a roughly 70% chance of the Fed cutting rates by another 25 basis points in December, but investors are pricing in a total of about 82 basis points of cuts by the end of 2026, taking the federal funds rate from its current 3.88% to about 3.06%.

Information from the US Institute for Supply Management (ISM) just released shows that the country's manufacturing sector is showing signs of weakening. The manufacturing PMI index fell from 49.1 in September to 48.7 in October, lower than the forecast of 49.5. This reflects a slowdown in economic activity and could put pressure on the USD.

When the US dollar weakens, gold prices are often supported because gold becomes more attractive to investors holding other currencies. If this trend continues, gold prices could rebound in the near future.

Investors are awaiting the ADP October jobs report, due on Wednesday. This data is considered an important indicator of the direction of interest rates. If the number of new jobs declines sharply, the possibility of the Fed being forced to cut interest rates will increase, thereby creating momentum for world gold prices to increase.

According to experts from UBS Investment Bank (Switzerland), gold prices are currently only going through a short-term adjustment period and the long-term trend is still up.

UBS predicts that gold prices are likely to reach $4,200/ounce in the near future. In the event of increased geopolitical instability or market volatility, gold prices could even jump to $4,700/ounce.

Despite the recent pullback in the gold market, analysts at UBS do not believe there is a strong enough fundamental factor to trigger a long-term sell-off. The correction, according to UBS, is a result of technical factors and a short-term decline in futures open interest, rather than a sign of a negative trend.

UBS cited a third-quarter report from the World Gold Council, which noted that demand for gold remains very strong. Specifically, central banks have purchased 634 tons of gold since the beginning of the year and are expected to reach 900 to 950 tons in 2025. In particular, the pace of purchases is accelerating in the fourth quarter, reinforcing the positive outlook for gold prices.

Not only central banks but also individual investors have increased their gold holdings. Gold ETF inflows reached 222 tonnes, while demand for gold bars and coins exceeded 300 tonnes for the fourth consecutive quarter. This reflects a positive trend in which gold prices continue to be supported by genuine investment demand globally.

UBS believes that the current gold price is in an attractive range for investors to consider buying. The recent correction has not reduced the attractiveness of gold in investment portfolios.

The bank recommends that investors allocate a small single-digit portion to gold, as a tool for asset protection and risk hedging.

According to UBS, the gold market is still in a period of active accumulation, and many investors have not really allocated enough weight to gold in their portfolios. With the prospect of gold prices rising and global risks not yet cooling, now is the right time to consider holding the precious metal.

Gold prices are reacting strongly to geopolitical factors, monetary policy and global investment demand. Continued buying by central banks and individual investors shows that the upward trend in gold prices shows no signs of weakening.

UBS believes gold prices could well touch or exceed record highs if global uncertainty persists.

With forecasts ranging from $4,200 to $4,700 an ounce, gold prices continue to be the focus of the financial world.