5 days ago
- Business
- New Straits Times
UOB keeps positive gold outlook despite US tariff confusion
KUALA LUMPUR: United Overseas Bank (UOB) has maintained its bullish gold price forecast despite market jitters over a potential change in United States import tariffs on gold bullion bars.
Its head of markets strategy Heng Koon How said uncertainty arose after the US Customs and Border Protection updated the Harmonised System code for importing gold kilo bars and 100-ounce bars.
These bars, widely used in Comex futures settlement, could potentially no longer be tariff-exempt under the new classification.
"There was much confusion and concern over the supposed change, which could result in these bullion bars being subjected to import tariffs," Heng said in a note.
He added that given the large amount of gold the US imports from Switzerland, the move could be linked to ongoing trade tensions between the two countries.
Industry players have warned the measure could tighten bullion supply and inject volatility into the US gold futures market. UOB also noted concerns that supply disruptions might even threaten the viability of Comex gold futures contracts.
Swiss Association of Manufacturers and Traders in Precious Metals president Christoph Wild said, "With a tariff of 39 per cent, exports of gold bars will definitely be stopped to the US."
Despite the market anxiety, Heng said UOB's positive view on gold remains unchanged, supported by strong central bank demand, a weaker US dollar and expectations of US Federal Reserve rate cuts.
"We keep to our gold forecast of US$3,500 per ounce by the fourth quarter of 2025 and US$3,700 per ounce by the second quarter of 2026," Heng said, adding that spot gold is currently just under US$3,400 per ounce.
He added that the upcoming resumption of the Fed's rate-cutting cycle at the September Federal Open Market Committee meeting would reinforce the weak dollar backdrop, which is positive for gold prices.
While the White House is expected to issue a clarification soon, Heng cautioned that "nerves are frayed and the bullion market will likely stay tight with investors remaining wary of further tariff risk."
