(Bloomberg) — Gold (GC=F) will rally to $2,900 an ounce by the end of next year, according to UBS Group AG, echoing a call from Goldman Sachs Group Inc. for further gains as central banks expand their holdings.

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There’s likely to be a period of consolidation due to the stronger dollar and concerns over the potential for more US fiscal stimulus to lead to higher rates before the precious metal starts climbing again, UBS analysts including Levi Spry and Lachlan Shaw said in a note. Bullion would rise a little further, to $2,950 an ounce, by the end of 2026, they said.

“The US Red Sweep, strong diversification buying interest and elevated global uncertainty to continue to support prices,” the analysts said. Gains “should be driven by continued strategic gold allocations and official-sector purchases in a backdrop of high macro volatility and persistent geopolitical risks,” they said.

Gold has been one of the strongest-performing commodities of 2024, setting successive records before a pullback following the US presidential election as the dollar spiked. The year-to-date advance has been supported by central-bank accumulation, the Federal Reserve’s pivot to monetary easing, and geopolitical tensions in Europe and the Middle East.

Spot gold traded near $2,624 an ounce, and has rallied 28% this year.

Goldman Sachs forecast this week that the precious metal would climb to $3,000 an ounce by the end of next year. That bullish view hinged on higher demand from central banks, plus flows to exchange-traded funds as the Fed cuts rates.

UBS also flagged more buying from monetary authorities. “The official sector, which tends to buy physical gold bars, is likely to continue adding to reserves, for diversification purposes and amid geopolitical tensions and sanctions risks,” it said. “Many central banks’ gold reserves remain small as a percentage of total assets.”

(Updates price in fifth paragraph)

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