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UBS Lowers Gold Forecasts, Sees Average 2013 Price At $1,440/Oz

By Kitco News
Thursday June 20, 2013 8:40 AM

(Kitco News) - UBS cut its price forecasts for gold, pegging the metal’s 2013 average price at $1,440 an ounce, in light of Federal Reserve Chairman Ben Bernanke’s comments about tapering stimulus if economic conditions warrant, the Swiss bank said on Thursday.

The bank’s one-month target changed to $1,250 from $1,425 previously and their three-month forecast fell to $1,350 from $1,500. Because of the short-term changes, UBS also altered the longer-term forecast. The 2013 average price of $1,440 is down from the previous forecast of $1,600. The 2014 estimated average price is seen at $1,325 from $1,625 and the 2015 estimated average price was cut to $1,200 from $1,500.

Joni Teves, UBS analyst, said the reduction in the gold forecast is tied to the change by UBS’ U.S. economists, who pulled forward their expectations for quantitative easing tapering to the fourth quarter of 2013, versus expecting it in the first quarter of 2014. 

The outline for potential stimulus withdrawal offered by Bernanke “creates an increasingly difficult environment for gold. Slowing Fed asset purchases with the end now potentially in sight, higher yields, a stronger dollar and continued improvements in the economy are significant obstacles that perpetuate an already very weak investor sentiment,” Teves said.

She said when UBS made the original one-month price forecast in late April, it was based on the idea that gold would consolidate after the sharp price break back then.

“Developments since then have highlighted gold’s struggle to rebuild investor confidence, with prices just stopping short of that target level during several attempts to venture beyond $1,400 in late May to early June. The damage to sentiment has been severe, in spite of significant effort from physical markets to offer comfort,” she said.

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By Debbie Carlson of Kitco News dcarlson@kitco.com

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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