UBS Cuts One-month Gold Price Outlook by 13 Percent

Platts reported that UBS AG (NYSE:UBS) analyst Joni Teves said Monday that the bank has cut its one-month gold price forecast to $1,050 per ounce. That’s a reduction of 13 percent.
UBS still sees the anticipated US interest rate increase as a key catalyst for the gold price.
As quoted in the market news:

“Our new price forecasts signal our view that there is scope for further downside in gold from here on the back of both macro and gold fundamental factors over a one-month time frame,” Teves said.
The analyst said that the possibility of a US Federal Reserve interest rate increase in September was the key catalyst for the change to the forecast.
“We think weakness is likely going to build heading into the FOMC meeting in September. Nevertheless, selling firepower should be relatively limited…Any further weakness should encourage market participants to start seeing value in gold around these lower levels,” Teves said.
Key physical markets — i.e China and India — have yet to react overly bullishly to the dollar price weakness.
Still, Teves said he believes that this could be set to change.
“In spite of relatively disappointing response from physical markets thus far, we expect an improvement in this market segment and lead a recovery further out, especially as seasonality kicks in,” she said.
The bank said she believes that short-covering should eventually lead to gold back above $1,100/oz.

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