Gold to Move 'Above $2,000 in Coming Months': UBS
Thursday September 29, 2011, 10:07 am EDT
Gold's recent sell-off belies its long term attractiveness and
investors should avoid the panic and stay faithful to the precious
metal, Dominic Schnider, Commodities expert at UBS Wealth
Management told CNBC Thursday.
"The structural problems still remain and Greece is really going to
call for higher prices and higher demand.
So we are looking at $2,000 and above in some of the months to
come," Schnider said.
He dismissed notions that the gold bubble was close to bursting but
cautioned that investors should expect more falls in the short
term.
"In the short term you might see some further downside in the price
but the demand side is still there," he said.
Gold has lost much of its sheen in recent days as part of a wider
metals sell off and the strength of the US dollar in the face of
stock market volatility over wider macro-economic woes.
An arrest in the rise of the metal saw a number of commentators
claiming that the gold sell-off could see the price of the precious
metal plummet to below the $1,500 level.
Marc Faber, author of the Gloom Boom, and Doom Report, told CNBC
earlier this week that he would not be surprised if a 40 percent
price correction occurred, causing gold to bottom out at $1,100 to
$1,200.
Schnider added that gold would remain a safe haven because market
volatility was so sharp but an increased desire by investors for
liquidity could hamper its revival to the upside.
"If there is a liquidity crunch then even gold is going to have
difficulty holding off and then cash is king. Gold is being driven
weaker because of investors' desire for more liquidity," Schnider
said.
Hampering another rally in gold prices is the strength of the
dollar trade, but Schnider said demand for the dollar would be
short term.
"It's all about the fear trade and risk aversion is shooting up and
gold should be supportive on the one hand but if you seek liquidity
it's all about the U.S. dollar. The dollar strength is just short
term because the structural story remains unpleasant," Schnider
said.
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