UBS Upgrades Gold Price Forecast for 2008 and 2009

Source: Thomson Financial  (10/8/07)

"The past twelve months has seen strong jewellery demand growth despite higher prices," said John Reade, UBS metals analyst. "Potential for a weaker US dollar, concerns about the credit crunch and the impressive rally have brought investors back to gold in ways not seen for years, or in the case of safe haven buying, decades."

UBS has upgraded its gold price forecasts for 2008 and 2009 due to the changing macroeconomic outlook, on top of growing evidence the jewellery market adapted to higher prices.

The investment bank has increased its 2008 forecast to 760 usd per ounce from 650 usd, while they now expect bullion to average 700 usd per ounce in 2009 versus a previous forecast of 550 usd.

The potential for further weakness in the US dollar, which has recently fallen to a series of all-time lows against the euro, and the ongoing economic uncertainty stemming from the US sub-prime crisis has led UBS analysts to predict gold prices will now be stronger over the next two years than anticipated.

"The past twelve months has seen strong jewellery demand growth despite higher prices," said John Reade, UBS metals analyst. "Potential for a weaker US dollar, concerns about the credit crunch and the impressive rally have brought investors back to gold in ways not seen for years, or in the case of safe haven buying, decades."

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