"There's plenty of uncertainty out there," said the bank's commodity and Asia-Pacific commodity head, Dominic Schnider. Top among consideration is the pace of interest rate hikes from the Federal Reserve, he added.
"Inflation is going to accelerate faster than the Fed is going to hike rates; that's good for real assets. On top of it, we are looking for weak dollar on broad basis; that combination has a good tendency to boost prices," he told CNBC's "Squawk Box."
The yellow metal has further upside to $1,300 an ounce, Schnider said.
Federal Reserve chairwoman Janet Yellen will testify on the U.S. economy and monetary policy before the House Financial Services Committee on Wednesday with the market closely watching for any signals of a rate hike. The Fed's next meeting is on March 14-15. The Fed has forecast as many as three interest rate hikes this year, though debate has grown on the pace.
UBS expects two rate hikes this year because it sees the Fed as cautious until policies proposed such as tax cuts and higher spending actually get legislative nods as currently proposed.
"The economy is expected to accelerate a bit this year versus last year but there's not going to be an awful lot of acceleration taking place. You can argue Trump is going to able to bring a huge fiscal stimulus and that's why growth is going to accelerate 4 percentage points. We think that is unlikely to happen; we have yet to see it's going to pass (the U.S.) Congress," said Schnider.
"There's a lot of uncertainty here. For the Fed, in the current environment, this means: 'yes guys, we are going to normalize rates but it's going to be slow moving. Give us a little bit of time, let us assess the situation.'"