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Not Bullish Enough: UBS Doesn't Rule Out Gold Above $1,600, Upgrades Price Forecast

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(Kitco News) - Growing global recession fears could push gold prices to $1,600 an ounce or even higher, according to UBS as it updates its gold forecast for the rest of the year.

In a research note released Thursday, Joni Teves, strategist at the Swiss Bank, said that she is increasing her bullish outlook on gold as uncertainty grips financial markets. She said that investors are turning to the yellow metal as the U.S.-China trade war slows economic growth and central banks look to embrace more dovish monetary policies.

“It is becoming increasingly challenging for market participants to anticipate and plan for the future,” Teves said. “In this environment of rising uncertainty and falling opportunity costs of holding gold, the yellow metal stands out as a clean way to take a strategic position both for institutional investors as well as the official sector.”

In the report, Teves raised the annual gold price forecast to $1,405, up from her previous forecast of $1,370 an ounce. For 2020, Teves upgraded her annual gold prices to $1,550 an ounce, up from $1,450.

For the rest of the year, Teves does not rule out a move to the $1,600 level.

Although gold has had an impressive run since in the last three months, Teves said that it doesn’t appear that the gold market is overextended. She added that gold remains attractive as 40% of all government bonds are now trading in negative territory.

“We think wider exposure to gold is still not overly extended and looks particularly muted compared to investor allocations to other asset classes. Gold as a percentage of US and global funds' total AUM remains limited and well off the highs reached during the previous bull-run. There should be ample room for strategic gold positions to continue to grow,” she said.

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