Go for Gold
Amid Dollar Weakness
Insight from UBS Chief Investment Office, www.ubs.com, on Gold and the Dollar weakness:
The US dollar index suffered five consecutive declines last week, and the greenback looks headed for its worst monthly performance since January 2018. That follows EU stimulus measures which have increased confidence in the sustainability of the union and the single currency.
We expect dollar weakness to persist into year-end, due to prolonged US Federal Reserve easing, a waning interest rate differential, and political uncertainty as we head into the US election season. In our view, the most likely beneficiaries of this weakness will be sterling and gold.
We expect a Brexit agreement to come in the fall, while an improving economic outlook for the UK should help the currency make significant gains against the US dollar.
Gold has hit a nine-year high, but we think it has room to move higher, and have upgraded our forecast to USD 2,000/oz by September. Dollar weakness supports our preferences for sterling and gold.
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