UBS Sees Gold Soaring to $2,300

WikiFX News (22 Aug) - Union Bank of Switzerland (UBS) anticipated that gold prices may surge to $2,300/oz soon in the event of an escalation of geopolitical tensions.

Gold prices will climb to a higher level because of markets' higher requirement translated from the fundamental conditions consist of volatility, low interest rates and the Fed's balance sheet. Markets have attributed the 2020 gold price rally to these themes. Fortunately for bulls, the same tailwinds remain despite recent declines.

According to the UBS, demand for gold this year has been driven mostly by record inflows to gold ETFs, so the price reaction was exaggerated and should be seen in the context of the sharp price runup prior to the pullback. With the Fed continuing to suppress nominal rates and inflation expectations rising, the UBS maintains its end-year forecast of $2,000/oz. In the near-term, gold may move as high as $2,300/oz, particularly if geopolitical tensions rise.

Technically speaking, gold prices may spike above $1,985 on the shorter time frames if selling pressure returns, while a breach below may allow selling to accelerate; gold prices could get even higher unless such a move is attempted.

All the above is provided by WikiFX, a platform world-renowned for foreign exchange information. For details, please download the WikiFX App:

bit.ly/WIKIFX

(Chart: Gold weekly time frame, Jul. 2011-Aug. 2020)