The First Bank Raises The GOLD Forecast

Posted on Posted in Daily Blog Post


Only in January, this year when gold price was about $1200, all big boys (banks) came out in full force at the same time to downgrade gold price to $1000-$1100 in their annual forecast for 2014 but today (in less than 2 months) , you start to see UBS, the first big bank to raise the gold price forecast.

I am sure many banks have already bought in some gold when it dropped to $1180 not long ago. Soon, some more banks will join in the UBS’s bandwagon to declare that ‘it is time to accumulate some gold’.

UBS AG boosted forecasts for gold in 2014, citing a change in U.S. investors’ attitudes toward the precious metal that’s rallied this year on increased haven demand and buying from Asian consumers.

The one-month forecast was raised to $1,280 an ounce from $1,180, while the three-month outlook was increased to $1,350 from $1,100, analysts Edel Tully and Joni Teves said in a report. Gold may average $1,300 in 2014 from a previous estimate of $1,200, they said, while holding the 2015 target at $1,200.

Bullion climbed this year to the highest level in three months as signs the U.S. economy wasn’t recovering in line with expectations boosted demand for a haven. The more bullish view from UBS contrasts with outlooks from Societe Generale SA and Goldman Sachs Group Inc., which expect the metal to falter as the Federal Reserve presses on with cuts to stimulus. Gold slumped 28 percent in 2013 as investment holdings contracted.

“Gold has started to shed its stigma, if slowly,” Tully and Teves wrote in the report. “Over the past thirteen months gold was either the favorite asset to short or to ignore completely. Recent developments, however, suggest that this is no longer the case, and momentum is returning.”

Sentiment Shift

There’s a “ positive sentiment shift taking place amongst U.S. investors towards gold,” Tully and Teves said. “This marks quite a sea-change in attitude and, in turn, a sizeable potential boost for the metal.”

Bullion is being increasingly viewed by investors as insurance against potential stresses, such as further emerging- market turmoil, the analysts said. The improved sentiment is helped by Chinese physical buying, they said.

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