UBS has offered three reasons to “buy gold now.” The global investment bank expects gold to break its all-time high later this year. Despite gold pulling back from its $2000-plus level, analysts at UBS believe that the yellow metal will still break its all-time high later this year. Gold remains 8.2% higher since the start of this year, and economists at UBS think it is likely to break its all-time high later this year due to three factors.
First, UBS believes that gold should benefit from rising inflation expectations. The US Federal Reserve has already said that it will not raise interest rates until it sees inflation moving above 2% for an extended period. This means that investors are likely to continue looking for inflation hedges, such as gold.
Second, UBS thinks that gold will be supported by a weak US dollar. The US dollar has weakened this year due to the Federal Reserve's dovish policy stance and the increased risk of a contested US presidential election. A weaker dollar makes gold more affordable for holders of other currencies.
Third, UBS believes that gold will be supported by geopolitical risk. The US-China trade war, rising tensions between the US and Iran, and the ongoing COVID-19 pandemic are all factors that could create uncertainty and increase demand for safe-haven assets, such as gold.
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Gold is down about 2% in May, as optimism around a possible U.S. debt ceiling deal grows. It's up more than 7% for 2023, and UBS thinks it will break its all-time high later this year, as we have discussed.
Gold prices might be cooling off, but that doesn't mean it's time to give up on the precious metal. In fact, now could be the perfect time to invest in gold. With the stock market in flux, and cryptocurrency experiencing volatility, gold is a reliable investment option for those seeking a respite from the roller coaster of other markets.
So, whether you're a seasoned investor or simply looking for a way to diversify your portfolio, gold remains a solid choice. And with UBS offering three compelling reasons to buy gold now, it's an investment that's worth serious consideration.