Gold has become a 'market consensus long position' trade in early 2025. After gold prices surged approx. 60% in total within the year (setting around 40 new highs in 2025), the market began seeking second and third-tier derivatives of gold for higher leverage, such as silver, platinum-group metals and miners, with investor interest at extremely high levels, UBS released a research report saying.

The broker was increasingly cautious about the rising short-term enthusiasm in gold trade. However, traditional indicators have not yet shown extreme crowding (COMEX net long and ETF inflows), reflecting a broad based gold buying.

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Despite strong momentum and a certain degree of 'crowded' positioning, UBS did not see conditions for a sustained downcycle in gold. The broker believed that the logic of central banks continuously purchasing gold remains valid, although most gold pricing models are currently 'broken.'

The five gold bear markets over the past around 50 years occurred during periods of strengthened USD, declining inflation or expectations, rising economic growth and reduced risk premiums/uncertainty, according to UBS' strategy.

Looking ahead to the next 6-12 months, the broker expected the above conditions to move in the opposite direction, and believed that this, combined with the ongoing themes of de-dollarization and debasement, will support the demand for gold asset allocation.

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