UBS remains bullish on Gold price in long-term

London (July 12)  The decline in gold is largely the result of rising real yields, said UBS, which nevertheless maintains its upbeat view on the metal for the longer term.

 Gold has fallen some $90 from its June high. Unsurprisingly, the pullback in gold has coincided with the rise in U.S. real yields to the year's highs as well as the sharp increase in real yields in Europe to the highest levels in more than a year.

“We have argued for some time that real rates tend to have the strongest influence on gold prices. We have also flagged that a key downside risk we are monitoring closely is the potential for higher yields in Europe to weigh on gold,” said analysts at UBS.

 Indeed, the market is focusing on these factors right now, against the backdrop of a hawkish shift in tone among central banks. Gold has been unable to benefit from bouts of dollar weakness, although prices might be even lower if not for the dollar’s decline.

 Gold's performance of late has been weaker than we expected, and recent developments present a considerable challenge to their positive outlook.

“But the market has already moved a lot and positioning has adjusted. We maintain our view that gold should recover from this latest pullback as the move higher in real rates is unlikely to be sustained and we see longer-term value around these levels,” UBS noted.

Source: ScrapReguster