UBS sets bold $6,200 gold target as Middle East tensions rise

Investing.com

Sat, February 21, 2026 at 4:29 PM GMT+9 2 min read

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Investing.com – UBS just released its latest House View report in which it focuses on the global commodities industry. The report outlined the investment bank’s latest gold (XAUUSD) price target of $6,200/oz, driven by geopolitical risks and a conducive macro environment.

Gold was trading at $5,035 an ounce, representing a small gain of 0.8% on February 20. The yellow metal was largely unmoved by the growing risk of the US attacking Iran despite ongoing nuclear talks between the two countries.

The Iran factor: military buildup drives safe-haven demand

One of the key factors behind the elevated gold price target is the escalation of tensions between Iran and Washington DC. The tensions have fueled a rally in crude oil prices, with Brent crude trading at $72/bbl, while the U.S. amasses troops in the Middle East.

Analysts have noted that the Middle East U.S. military buildup is on a much larger scale than the one it conducted to capture Venezuelan President Nicolas Maduro earlier this year. The buildup indicates that the U.S. is planning for a sustained war with Iran instead of a one-off operation like in Venezuela.
UBS strategist Dominic Schnider noted that while individual geopolitical events rarely have a permanent impact on global markets, they are powerful triggers for temporary volatility spikes that drive investors toward portfolio hedges like gold.

Fed easing cycle remains a primary tailwind

Beyond geopolitics, the fundamental macro environment remains highly supportive for non-yielding assets. UBS expects the Federal Reserve to continue its easing cycle, forecasting two 25-basis-point rate reductions by the end of September.

**Real rates:** Lower U.S. real interest rates and a potentially weaker U.S. Dollar are expected to act as persistent tailwinds.

**Record demand:** Global gold demand exceeded 5,000 metric tons for the first time in 2025, and UBS expects this to rise further due to robust central bank purchases and growing investment activity.

The supply-side squeeze

On the other side of the equation, gold supply remains stagnant. Analysts at Wood Mackenzie estimate that 80 mines will exhaust their current production plans by 2028, meaning that even as demand from Asian jewelry markets and central banks increases, new supply may struggle to keep pace.

Europe brightens: a cyclical turn for German equities

Interestingly, while the U.S. faces trade and geopolitical hurdles, UBS is turning bullish on European Equities. Buoyed by a pickup in German business activity, where manufacturing PMIs recently rose above 50 for the first time since June 2022, UBS expects European profit growth to accelerate to 18% by 2027.

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UBS recommends that investors consider an allocation of up to mid-single-digits in gold within a diversified portfolio. With a price target of $6,200/oz, the firm views the yellow metal as the most effective hedge against a “range of market and economic risks” currently clouding the horizon.

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