UBS Warns on 15% Tariff Plan, Sees Gold at $6,200/oz and Fed Cuts in 2026

Global markets enter the week with two dominant themes, US tariff policy and the Federal Reserve’s rate path, alongside earnings from AI bellwether NVIDIA, according to UBS Chief Investment Office.

In its latest weekly outlook, UBS Global Wealth Management CIO Mark Haefele said investors are parsing the implications of the US Supreme Court's ruling that struck down tariffs imposed under the International Emergency Economic Powers Act (IEEPA). The decision halted the collection of roughly two-thirds of tariff revenue, contributing to a 0.7% rally in the S&P 500 at the end of last week.

President Trump has since signaled plans for a 10% to 15% global tariff, using alternative legal provisions that allow levies for a maximum of 150 days, pending Congressional approval. Markets appear to be pricing in difficulty in restoring prior tariff levels permanently, UBS said.

Fed Outlook: Split Views, Cuts in 2026

The second pillar in focus is monetary policy. Minutes from the Fed’s January meeting showed a widening divergence among policymakers, ranging from calls for rate cuts to suggestions that hikes could re-enter the discussion.

UBS expects the Fed to pause easing in the near term and resume later once tariff-related inflation pressures fade. The bank forecasts two rate cuts in 2026, a scenario it says would be supportive for global equities, quality bonds, and gold.

Scheduled comments from policymakers, including voting members Lisa Cook and Christopher Waller, will be closely watched for directional cues.

Can the Equity Rally Broaden? Industrials +14% YTD

A key market development this year has been sector rotation. As of 20 February:

• S&P 500 overall: +0.9% YTD
• Industrials: +14% YTD
• Information Technology: -3.5% YTD
• Communication Services: -0.2% YTD

UBS links the industrial sector’s outperformance to improving manufacturing data. The ISM manufacturing index recently pointed to the strongest expansion since 2022 after a prolonged contraction. Structural drivers, US reindustrialization, AI-driven energy demand, electrification, and aerospace growth, are also underpinning momentum.

Meanwhile, NVIDIA, with nearly 8% weighting in the S&P 500, will test investor confidence in AI capital expenditure. UBS notes skepticism is rising as hyperscaler capex is projected to absorb nearly all free cash flow this year.

UBS currently rates US IT and communication services as Neutral, while upgrading industrials to Attractive. It recommends diversification toward banks, healthcare, utilities, and consumer discretionary sectors.

Geopolitics and Gold: 65% Surge in 2025

Escalating US-Iran tensions have added to safe-haven demand. Gold prices have risen nearly 65% in 2025 and are up an additional 18% year-to-date in 2026.

Data from the World Gold Council show total gold demand exceeded 5,000 metric tons for the first time in 2025. UBS maintains an Attractive stance on gold and projects prices could reach $6,200 per ounce this year before ending 2026 around $5,900/oz.

UBS argues that further Fed easing and sustained central bank and investor demand will continue to lower the opportunity cost of holding the non-yielding metal.

With tariff policy requiring Congressional backing within 150 days, a divided Fed debating rate direction, sector leadership shifting away from megacap tech, and geopolitical tensions simmering, UBS sees markets navigating a period of elevated policy uncertainty.

However, the bank maintains that expected Fed cuts in 2026, resilient industrial activity, and structural gold demand provide underlying support across asset classes.

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