Gold to surge toward $2300 amid geopolicital tensions – UBS
After reaching a record high of $2,051/oz in early August, gold suffered its largest one-day decline in seven years on 11 August, dropping back below $1,900/oz. Gold has already recovered to $2,000/oz. The bout of profit-taking in gold is short-lived as noted by economists at UBS who believe a bounce towards $2,300/oz is on the cards.
Key quotes
“Gold’s sell-off was driven by a rebound in 10-year real rates after falling to record lows in negative territory. Demand for gold this year has been driven mostly by record inflows to gold exchange-traded funds, so the price reaction was exaggerated and should be seen in the context of the sharp price runup prior to the pullback.”
“With the Fed continuing to suppress nominal rates and inflation expectations rising, we maintain our end-year forecast of $2,000/oz.”
“In the near-term, gold may move as high as $2,300/oz, particularly if geopolitical tensions rise.”
Author
FXStreet Team
FXStreet
