Gold prices could rise toward $4,700 an ounce as mounting political and financial market risks sustain demand for safe-haven assets, even if the end of the U.S. government shutdown improves investor sentiment, according to UBS.

The bank’s strategists believe that bullion’s recent pullback is just a pause in its ongoing rally.

“We think gold prices can climb further, even if the potential end to the longest government shutdown in U.S. history supports risk sentiment,” strategists led by Ulrike Hoffmann-Burchardi said in a note.

Political uncertainty remains a key driver. The team pointed to lingering questions about the timing of the Senate vote to finalize the spending bill and the possibility of another partial shutdown early next year if Congress fails to reach a longer-term agreement.

UBS also flagged uncertainty surrounding the Supreme Court’s pending ruling on the legality of tariffs imposed under the International Emergency Economic Powers Act (IEEPA), saying this should “provide ongoing support for gold.”

Elevated global government debt levels are also bolstering demand for gold amid concerns about fiscal sustainability and currency depreciation, according to UBS. The latest data from the World Gold Council showed total demand reached a record high in the September quarter, driven by investment flows and renewed central bank buying. The bank expects full-year demand to be the strongest since 2011.

Monetary policy and currency trends are also expected to favor the metal, with strategists anticipating two more Federal Reserve rate cuts by early 2026, citing weakening labor market indicators and falling consumer sentiment.

“With U.S. real interest rates likely to fall further and undermine the appeal of the US dollar, we expect gold to stay supported,” they wrote.

Overall, UBS remains bullish on the yellow metal, seeing it “as an effective portfolio diversifier and hedge.”

The bank reaffirmed its 12-month price target of $4,200 an ounce, adding that a “significant rise in political and financial market risks could push gold toward our upside target of $4,700/oz.”