UBS says gold price has peaked

After topping US$1,600 (HK$12, 480) per ounce earlier in the week, gold has peaked and is now set to plunge below US$1,000 in the long run, Swiss investment bank UBS forecasts.

“There is more potential for commodity prices to decline than to rise during the third quarter,” managing director Peter Hickson said.

The spot price of gold, which hit a record US$1,610.14 an ounce on Tuesday, has little room to grow further, he said.

The metal hovered around US$1,597 in London morning trade yesterday.

Hickson expects gold to trade around US$1,500 this year, supported by sovereign debt concerns and a structural deficit of 262 tonnes – the first shortfall since 2008.

But it will likely fall to US$1,380 next year, and to US$934 in the long term.

With the second round of quantitative easing by the US Federal Reserve ending last month, commodity prices are expected to see increasing downward pressure as the US dollar strengthens, Hickson said.

Over the next three months, the Swiss bank is bullish on thermal coal, crude oil and copper, due to strong demand from China.

Hickson expects Brent crude to trade at an average of US$104 a barrel this year, and US$95 the next.

Copper, meanwhile, is tipped to surge 10 percent in the next three months.

Iron ore – the raw material for steel – is also favored, as Beijing has vowed to build 10 million affordable flats nationwide this year.

China’s “exploding middle class” in the western provinces will also help boost ore demand over the next five years. – Source: http://www.thestandard.com.hk

Posted by on July 24, 2011. Filed under Precious metals. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry