UBS: Gold Set For Bull Run But...

London (July 10)  The latest gold forecasts from UK-based UBS investment strategist Joni Teves open with the sentences: "We think gold has entered a new phase. Gold has likely entered the early stages of the next bull run."

Teves goes on to forecast an average gold price for the year of $1,280 (up $55 from the previous forecast), which may look rather less than bullish at first sight given the current gold price in the $1,360s, but points out that the average price this year so far has only been $1,222. Thus the new average price prediction suggests an H2 average of around $1,340 - conservative but perhaps realistic if gold sticks in the $1,350-$1,400 range for the remainder of the year. Indeed Teves comes up with a short term target for the gold price of $1,400 (from a forecast of $1,250 back in April) - much in line with a number of other bank analysts/strategists who have been falling over themselves to predict higher gold prices during the remainder of the year, but have already mostly been overtaken by events. Few bank analysts though will stick their necks out and come up with truly bullish forecasts, and Teves is no exception, although perhaps more positive than some. But overall her analysis, in our view, remains somewhat on the conservative side.

What one can say about the UBS figure is that at least it is largely slightly upbeat, but hardly suggests a true bull market in gold - yet. The Brexit vote, with its destabilising effects on global markets, has thrown all these calculations into disarray. However, we would assume there will be another UBS forecast forthcoming in around three month time which will take into account whatever happens to global markets and the economy, and thus the gold price, between now and then. We would anticipate ourselves that there will be a higher short term forecast forthcoming by then as the current one may well have been already breached. But that, of course is speculation on our part - just as brokers and investment funds will always tell you prices may go up or down - there's no certainty in future progress.

Source: LawrenceWilliams