Gold prices have seen some recovery after recording their sharpest one-day fall in more than a decade. There were concerns that the long-running rise in the metal had reached a turning point. However, UBS pointed out that the conditions that have historically ended gold bull markets are not yet in place, and it continues to hold a positive view.
In a report released on 1 February 2026, UBS Chief Investment Office said the fall was severe but not unusual within an ongoing upward move.
UBS on Gold: Why prices fell so sharply
UBS said gold dropped sharply after US President Donald Trump announced Kevin Warsh as his nominee for Federal Reserve chair. The firm noted that Warsh is widely seen as favouring stricter monetary discipline, restrained growth of the Federal Reserve’s balance sheet, and institutional reform.
According to UBS, this announcement intensified concerns about interest rates and supported a stronger US dollar, both of which weighed on gold prices. UBS also said the fall was amplified by profit-taking after recent gains, reduced liquidity in futures markets, and forced selling after exchanges tightened margin requirements.
UBS described the move as “the most substantial one-day decrease in 13 years,” adding that similar spikes in volatility have often followed changes in expectations around Federal Reserve policy.
UBS on Gold: Why this does not mark the end
UBS said that sharp daily declines do not, by themselves, end gold bull markets. The firm stated, “Gold bull markets typically don’t conclude simply because fears diminish or prices become too high; they end when central banks establish their credibility and pivot to a new monetary policy regime.”
UBS supported this view by pointing to history. In 1980, gold prices fell after aggressive tightening under Paul Volcker restored confidence in US monetary policy, pushed real interest rates sharply higher, and led to a long period of US dollar strength. In 2013, gold fell after the Federal Reserve convinced markets it could unwind quantitative easing without causing financial instability.
In both cases, UBS said inflation expectations declined, real yields rose, and confidence in central banks returned in a lasting way. UBS added that those conditions are not present today.
UBS on Gold: Where the market stands now
UBS said it views the current phase as the mid-to-late stage of an ongoing gold rise. According to the firm, this stage is usually marked by prices reaching new highs but experiencing intermittent pullbacks of around five to eight percent.
UBS said the factors that typically signal the end of a gold bull market have not appeared. These include sustained high real interest rates, a structurally stronger US dollar, improved geopolitical conditions, and fully restored central bank credibility.
UBS also noted that market pricing continues to show expectations for further easing. Fed funds pricing reflects around 53 basis points of rate cuts by the end of 2026, which UBS said aligns with its own expectation for two additional cuts. UBS added that US real interest rates are expected to decline further.
UBS on Gold: Rating, target price, and analysis
UBS continues to rate gold as Attractive. The spot price stood at $4,894 per ounce on 30 January 2026. UBS has set a mid-year forecast of $6,200 per ounce, which implies an upside of about 27% from recent levels.
“Gold bull markets typically don’t conclude simply because fears diminish or prices become too hig they end when central banks establish their credibility and pivot to a new monetary policy regime,” UBS said. “Since Warsh hasn’t demonstrated the same credibility as Volcker, we don’t believe this is the end of gold’s bull market.”
In the near term, UBS expects prices to consolidate between $4,500 and $4,800 per ounce. The firm said this is due to market positioning, reduced liquidity, and higher margin requirements, including an increase in COMEX gold futures margins from 6% to 8%.
Beyond the near-term consolidation, UBS said fundamentals should regain influence. The firm stated that it recently raised its gold demand forecasts following strong demand data reported by the World Gold Council. UBS expects continued support from central bank buying, higher ETF inflows, and increased demand for bars and coins, supported by lower US real interest rates and ongoing geopolitical uncertainty.
UBS added that it continues to view gold as a strategic long-term hedge within portfolios and remains long the metal in its global asset allocation.
Conclusion
According to UBS, gold’s sharp fall reflects volatility within an ongoing upward move rather than a lasting reversal. UBS said the drivers that have supported gold remain in place and that the conditions needed to end the rise have not yet emerged. The firm continues to hold a positive view on gold, even after its worst day in more than 13 years.