Gold Rally Has More Room to Run, These Strategists Say

UBS expects gold to reach $3,900 an ounce by next June. (Milan Jaros/Bloomberg)

This commentary was issued recently by money managers, research firms, and market newsletter writers and has been edited by Barron’s.

Join the Gold Rush

UBS House View—Daily U.S.
UBS
Sept. 12: While the price of gold is now up by close to 40% so far this year, making it the best-performing major asset class, we think the metal has further room to rally. We expect bullion to reach $3,900 an ounce by June 2026, up from our previous forecast of $3,700. [Gold traded Friday at $3,685.40.]

Real yields should fall further as the Federal Reserve resumes easing while price pressures remain. The U.S. real interest rate—the opportunity cost of holding non-yield-bearing assets like gold—has dropped by more than 20 basis points in less than a month to the lowest level since 2022 amid a swift repricing of Fed cut expectations by market participants. [A basis point is a hundredth of a percentage point.] With inflation likely to remain sticky, we expect real rates to fall further into year end, potentially into negative territory, supporting demand for gold.

These dynamics should also undermine the U.S. dollar, which we anticipate will weaken further over the next 12 months. As gold’s negative correlation with the dollar continues to hold, the greenback’s ongoing depreciation should also boost investment demand for gold…

Gold has provided an effective hedge against episodes of heightened economic, political, and geopolitical risk, with the metal outperforming all major equity and bond indices this year. As uncertainty persists in these areas, sufficient exposure to gold should further enhance the diversification and resilience of a portfolio. For investors with an affinity for gold, we reiterate our recommendation for a mid-single-digit percentage allocation. Select gold miners also represent an appealing way to gain exposure.

Ulrike Hoffmann-Burchardi and Team

New S&P 500 Targets

Quick Takes
Yardeni Research
Sept. 11: We are raising our year-end S&P 500 target from 6600 to 6800. That’s our base-case scenario, with a subjective probability of 55%. We currently assign a 25% subjective probability to a meltup that lifts the S&P 500 to 7000 by year-end 2025 and 20% odds to a correction in the index by the end of this year. If the Federal Reserve lowers the federal-funds rate on Sept. 17 and signals more rate cuts ahead, we will increase our odds of a meltup and decrease our odds of a correction.

We are still not convinced that the economy needs to be stimulated by the Fed. Inflation remains closer to 3% year over year than to the Fed’s 2% target. Real gross domestic product is growing solidly despite the recent downward revisions in payroll employment. The unemployment rate remains between 4% and 4.3%. All this implies that either real GDP will weaken significantly and the jobless rate soon will rise sharply or that productivity growth is making a strong comeback. We pick Door #2!

Ed Yardeni

Doubting the AI Revolution

Macro Picture
TS Lombard
Sept. 11: U.S. stocks have enjoyed a powerful revival from their post–Liberation Day lows, so much so that “U.S. exceptionalism” has returned as a market narrative. And if you ask investors why they are bullish, they all give the same answer: AI, obviously! Not only have the big tech stocks played a dominant role in America’s resurgence, but we are starting to see a tangible impact from this technology on the broader economy, in the form of a large boom in data center capex.

The bull case for U.S. stocks is that this AI revolution is only just getting started. Big tech will continue to plow vast sums of money into AI, and this will help to unlock further rapid advancements in the underlying technology, producing a virtuous earnings cycle. We, however, are much more skeptical—for three reasons. First, we have doubts about the underlying technology, which has hit a wall. AGI [artificial general intelligence] remains a pipe dream. Second, there are major questions about whether the current wave of AI investment can deliver adequate returns. Third, tech enthusiasts have overhyped the potential benefits to the macro economy in terms of output and productivity.

Of course, the thing about bubbles is that they can always grow larger. But using the template of the late 1990s, it isn’t clear the conditions are in place for another multiyear meltup. And if stocks do continue to rise, there is no reason why U.S. tech should dominate. More likely, we are looking at a global reflationary environment in 2026, in which all equity markets do well.

Dario Perkins

Bullish on Emerging Markets

September Barometer
Pictet Asset Management
Sept. 10: Emerging market stocks remain a bright spot in global markets. They have proved resilient in the face of U.S. tariffs as robust domestic consumption has helped cushion the impact of trade disruption. The emerging world has a GDP growth advantage of around two percentage points over developed economies, the largest since early 2000s.

We believe EM stocks are poised to deliver attractive returns in the coming months and expect firms based in emerging economies to deliver earnings growth of above 10% both this year and next, comfortably above their developed market peers. EM stocks also benefit from attractive valuations—their forward price/earnings ratio stands at around 13, on average, an unjustifiable 33% below that of developed markets. The prospect for a structural dollar decline is also beneficial, as it improves export competitiveness and encourages foreign investment inflow.

We’re optimistic on Chinese stocks, too, despite a recent slowdown in the economy. A 44% collapse in exports to the U.S. from March to July may have grabbed headlines, but the country’s exports to the U.S. represent only about 3% of China’s gross domestic product and are no longer a major source of growth. Beijing also has room to further support the economy with more coordinated stimulus. Taking this into account, we maintain our overweight stance across emerging markets.

Luca Paolini

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