UBS Offers 3 Reasons to ‘Buy Gold Now’ — Forecasts All-Time High This Year

Global concern slope UBS has provided 3 reasons for investors to “buy golden now.” Expecting golden to interruption its all-time precocious aboriginal this year, the Switzerland-based concern banking elephantine has retained its “most-preferred rating” connected gold.

UBS Sees 3 Key Reasons to Buy Gold Now

UBS, a planetary concern slope based successful Switzerland, has presented 3 reasons to see buying golden now. In a enactment titled “Three Reasons to Buy Gold Now,” published Thursday, by UBS Chief Investment Office, the firm’s strategists outlined their expectations that golden is poised to surpass its all-time precocious this year.

While acknowledging that the terms of golden has retreated from its caller high, the strategists wrote:

The yellowish metallic remains 8.2% higher since the commencement of this year, and we deliberation it’s apt to interruption its all-time precocious aboriginal this twelvemonth with aggregate mid- to longer-term drivers.

One cardinal origin driving the UBS strategists’ bullish outlook connected golden is their anticipation that cardinal banks’ request for golden volition “remain robust.” They explained that planetary cardinal banks purchased a grounds magnitude of golden past year, marking the 13th consecutive twelvemonth of nett golden purchases and “the highest level of yearly request connected grounds dating backmost to 1950.”

Citing the 1Q23 information from the World Gold Council indicating that “central banks are connected way to bargain astir 700 metric tons of golden this year, overmuch higher than the mean since 2010 of beneath 500 metric tons,” the UBS strategists detailed:

We deliberation this inclination of cardinal slope buying is apt to proceed amid heightened geopolitical risks and elevated inflation. In fact, the U.S. determination to frost Russian overseas speech reserves successful the aftermath of the warfare successful Ukraine whitethorn person led to a semipermanent interaction connected the behaviour of cardinal banks.

The 2nd origin that UBS expects to boost the terms of golden concerns “Broad U.S. dollar weakness.” The strategists described: “The absorption of a weakening dollar is clear, with the U.S. Fed having signaled a intermission successful its existent tightening rhythm aft 500 ground points of complaint hikes implicit the past 14 months. Other large cardinal banks, meanwhile, stay connected way to bash much to combat inflation.” They affirmed:

We judge the simplification successful U.S. output transportation volition proceed to measurement connected the greenback. Gold has historically performed good erstwhile the U.S. dollar softens owed to their beardown antagonistic correlation, and we spot different circular of dollar weakness implicit the adjacent 6–12 months.

The UBS strategists named rising U.S. recession risks arsenic the 3rd crushed to bargain golden now. They judge that investors volition flock to golden arsenic a harmless haven plus successful the lawsuit of a recession.

“Overall, caller information coming retired of the U.S. showed the country’s maturation is slowing,” they detailed, citing weaker-than-expected 1Q GDP, six consecutive months of contracting manufacturing activity, the weakest user sentiment since November, and tighter recognition conditions arsenic factors “likely to measurement connected maturation and firm profits.” They emphasized:

Based connected information since 1980, gold’s comparative show versus the S&P 500 improved importantly during U.S. recessions.

Noting that golden is expected to deed $2,100/oz by year-end and $2,200/oz by March 2024, the UBS strategists said they clasp their “most-preferred standing connected gold” alongside their “positive stance connected wide commodities.” They concluded: “We deliberation golden should stay a hedge wrong a portfolio context.”

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