The banks are starting to love gold again.
Just this week, investment bank UBS told its clients that they should be owning the yellow metal, offering a long list of reasons.
"An environment of low and negative rates narrows the gap between holding gold vs other assets, making having gold in a portfolio an attractive proposition amid heightened global macro uncertainty," UBS strategist Joni Teves wrote in a research note.
UBS is forecasting gold could trade as high as $1,400 in the short term, the bank raised its 2017, 2018 and 2019 gold price forecasts to $1,400, $1,450 and $1,475, respectively. On Wednesday, August Comex gold futures last traded at $1,366.80 an ounce, up 0.57% on the day. Overnight futures rallied to $1,277.50 an ounce, its highest level since mid-March 2015.
Teves wrote that, “[K]ey drivers include: 1) low/negative real rates, 2) the view that the dollar has peaked against [developed market] currencies, and 3) lingering macro risks.” Teves added that the macro story for gold today is “more compelling than ever.”
And UBS is not alone in making a bullish call on gold. HSBC’s Jim Steel recently said “The UK’s vote to leave the EU gave the gold rally another push, reflecting gold’s perceived status as a ‘safe-haven’ investment,” said on Tuesday. Steel raised his 2016 price target to $1,275 and 2017 target to $1,310, up from $1,205 and 1,300, respectively.
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