Stronger Gold Forecast for Next Two Years

UBS Adjusts Gold Forecast

As reported in Reuters today, two major factors contributed to today’s raising of the UBS 2008 and 2009 gold price forecasts. UBS noted that increased demand for gold in the jewelry trade even in the face of rising prices, along with an expectation of increased demand for gold as a speculative investment, indicate that the market has settled in to current price levels. With the comfort level raised, the floor seems more solid, making only smaller adjustments likely for the foreseeable future.

The previous UBS forecast called for $650 gold in 2008 and $550 gold in 2009. The new forecasts are for $760 gold in 2008 and $700 gold in 2009, indicating a higher fallback benchmark over the two-year period.

This added confidence in the reliability of gold as a long-term investment, in addition to the general attitude of gold as an inflation hedge, should invigorate those already looking at, or participating in this precious metals market.