UBS Wealth Management CIO downgrades the dollar rating to "unattractive," indicating that the pullback in gold prices presents an opportunity for increased allocation

UBS Wealth Management Asia Pacific Chief Investment Officer (CIO) Office released a report, stating that the bank has downgraded the dollar rating to "unattractive" this month. Although the dollar has recently stabilized, the bank expects the dollar to weaken again due to the slowing U.S. economy and rising concerns about the fiscal deficit. Investors may consider taking advantage of the short-term strength of the dollar to diversify excess dollar cash into other currencies.

The bank pointed out that the U.S. has good debt repayment capacity, excellent credit quality, and government bonds are still regarded as safe-haven and low-yield dollar assets. Global central banks also continue to value the excellent liquidity of the U.S. Treasury market. Given the strength of the U.S. capital markets, the dollar's status as a reserve currency, and the substantial wealth held by American households, there remains confidence in the U.S. debt repayment capacity.

The bank noted that the Trump administration is sensitive to rising bond yields. Last month, the 30-year U.S. Treasury yield briefly touched 5%, after which Trump postponed reciprocal tariffs. This indicates that the Trump administration is quite sensitive to market pressures, and adverse fluctuations in the financial markets may prompt the U.S. government to take action.

Additionally, the bank maintains its earlier forecast that gold prices will reach $3,500 per ounce by the first quarter of next year, believing that the recent pullback in gold prices presents a good opportunity for strategic exposure. Investors may consider allocating around 5% to gold