UBS Global Wealth Management’s Chief Investment Office (CIO) has revised its outlook on the U.S. dollar, downgrading it to “Unattractive” in its latest investment report. The move reflects growing concerns over the trajectory of the U.S. economy and mounting fiscal deficits, which UBS believes will weigh on the greenback in the months ahead.
Although the U.S. dollar has shown signs of stabilization in recent weeks, UBS expects this to be temporary. “While the USD has recently steadied, we anticipate renewed weakness driven by a combination of slowing U.S. economic growth and increasing investor attention on the country’s expanding fiscal deficit,” the report stated.
As a result, the bank is advising clients to use any short-term strength in the dollar as an opportunity to diversify excess U.S. dollar cash holdings into other major currencies. The recommendation comes amid persistent volatility in global markets and heightened geopolitical risk, both of which continue to influence currency trends and investor sentiment.
In parallel with its currency outlook, UBS reaffirmed its bullish forecast on gold. The CIO maintained its earlier projection that gold prices could reach USD 3,500 per ounce by the first quarter of 2026, citing a favorable macroeconomic backdrop that includes low real interest rates, a weaker U.S. dollar, and sustained demand for safe-haven assets.
Importantly, UBS views the recent correction in gold prices not as a sign of a reversal but as a buying opportunity for long-term investors. “The recent pullback in gold should be seen as a chance to raise strategic exposure,” the report noted. UBS suggests that investors consider allocating around 5% of their portfolios to gold, either through physical holdings, ETFs, or other gold-linked instruments.
The advisory aligns with a broader shift among wealth managers and institutional investors who are seeking to hedge against inflationary pressures, geopolitical instability, and the uncertainty surrounding central bank policy paths, particularly that of the Federal Reserve.
As markets await further clarity from upcoming U.S. economic data and Federal Reserve policy signals, UBS emphasized the importance of maintaining a diversified and resilient portfolio. The dual downgrade of the U.S. dollar and endorsement of gold reflects a cautious yet opportunistic approach in an increasingly complex global financial environment.
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