Tuesday, January 19, 2021

UBS paints a bearish case for gold

UBS’ world wealth administration unit sees gold falling to $1,800 this yr


The agency says that whereas gold should be supported by low US actual charges and a depreciating greenback to $1,950 in Q1 2021, costs might begin to come underneath stress nearer to mid-year earlier than weakening to $1,800 by year-end.

The latter backdrop comes because the agency expects macroeconomic situations to enhance and the Fed signaling that it’s going to step by step taper its bond-buying tempo.

Diving deeper into valuable metals, the agency argues that silver, platinum and palladium ought to outperform gold this yr on the again of upper industrial use. On the peak, they see silver costs reaching $30, platinum $1,250, palladium $2,900 this yr.

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The primary-half of the story is one most individuals would be capable of get on board with, however the latter backdrop is extraordinarily depending on how issues play out with the Fed.

I am not saying it might not occur however it’s a consideration relying on how the US financial system performs and if the vaccine rollout matches the timeline optimism.

Nonetheless, the Fed might warning in opposition to transferring too shortly to taper and/or to regulate coverage this yr or subsequent and that might nonetheless present an additional tailwind for gold later within the yr.

Wanting elsewhere, the Fed taper would not simply have an effect on gold costs however it’s going to additionally affect the equities euphoria and greenback decline narrative as nicely.

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