UBS Gold Forecast from Note on Growing Conflict in the Middle East:
- The forecast for the end of 2024 is $2,750
- By the fourth quarter of 2025 to US$2,900
Briefly from the note:
- We expect global markets to face turmoil from time to time, but we do not expect a large-scale conflict to erupt between Israel and Iran
- We expect energy flows from the Middle East to continue largely uninterrupted
- Stocks should be boosted by a soft economic landing in the US, accompanied by interest rate cuts by the Federal Reserve, strong corporate earnings, and optimism about the commercialization of artificial intelligence.
- Gold remains attractive as a hedge against geopolitical risks and potential shifts in US policy related to the upcoming elections. Gold is also likely to benefit from further Fed rate cuts, strong central bank demand, and increased investor interest through exchange-traded funds.
- The outlook for the oil market remains positive, with support coming from Chinese stimulus and early easing measures by the Federal Reserve, which should boost energy demand. On the other hand, the rate of production increases in the United States and Brazil has been slowing, and production from Libya remains low. Our base scenario is for Brent to trade at around $87 per barrel by the end of the year. Iran is incentivized to maintain unhindered energy flows in the region due to its dependence on oil exports. However, any disruption to key oil supply routes, such as the Strait of Hormuz, or damage to critical oil infrastructure could push Brent crude prices above $100 per barrel for several weeks.
This article was written by Eamonn Sheridan at www.forexlive.com.
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