UBS expects gold price to rise to $1,300

According to commodities specialist Wayne Gordon of UBS Wealth Management, the price of gold could rise further to $1,300 per troy ounce in the next three months. The main drivers that put gold on an upward trend in recent months are still intact, he said in an interview with BloombergFor example, he sees rising inflation and higher inflation expectations, which will push real interest rates further below zero. This is traditionally a very positive signal for precious metals.

The UBS analyst sees signs that inflation will rise further. On the one hand, due to wage inflation and a rise in the price of oil, and on the other hand, due to President Trump's policies. The new U.S. president wants to cut taxes while investing more in infrastructure, two measures that will further boost inflation. These measures will have an effect on the US economy and on inflation rates from 2018 onwards.

Dollar vs Euro

Waye Gordon is negative on the dollar for the longer term, because the possible positive effect of Trump's policy has already been factored into the currency. Also, the euro is currently being held back by uncertainty about the outcome of several elections in Europe. As a result, investors are distancing themselves from the euro and therefore prefer the US dollar at the moment.

If these concerns fade into the background in a few months, the euro could regain ground, according to analyst Gordon . The European economy is doing a lot better than it did a few years ago, while the US economy is currently struggling with rising debt and negative real interest rates. According to him, these factors could have a positive impact on the euro later this year. An appreciation of the euro against the dollar means that gold in euros will become cheaper again. Last week, the gold price in euro terms reached its highest level in almost five months.

UBS expects gold price to rise to $1,300 per troy ounce