Wednesday August 09, 2017 12:46
(Kitco News) - Despite gold’s mid-week rally, one major bank still expects “sideways” trading for the yellow metal in the second half of this year.
Speaking with Bloomberg Tuesday night, UBS Wealth Management’s Dominic Schnider said the bank remains a little “more bearish” than others when it comes gold.
“I think the main story in gold is it’s really a story of two rubber bands, one of the bands is pulling it up – that’s all about U.S. dollar weakness. On the other side, inflation risks have come down… so that’s the other rubber band pulling it to the other side,” the bank’s head of commodities explained.
“And since both forces are roughly equal, we’re just going to see a sideways move.”
Gold made a safe-haven comeback Wednesday as tensions between the U.S. and North Korea took center stage in the marketplace. December Comex gold futures last traded at $1,277.60 an ounce, up 1.19% on the day.
However, Schnider said he wouldn’t be shocked if the gold market moves down to $1,200 an ounce once markets refocus on the potential Federal Reserve rate hike later this year.
“If the economy in the U.S. continues to do solidly in the second half then I think there is pullback potential,” he said. “But [$1,200] should be a very good support line for gold.”
Schnider said UBS expects the Fed to hike rates in December, adding that “we actually think there’s going to be another two moves in 2018 and that’s not priced in.”
By Sarah Benali
For Kitco News