Regal Group International: UBS sees commodities continuing rally on Fed’s “game changer.”

Oct. 19, 2010 - PRLog -- Swiss investment bank UBS has informed Regal Group International sources that recent comments from the U.S. Federal Reserve point to a “racing certainty” that further quantitative easing is to be introduced at the central banks upcoming meeting in early November.

A fresh round of quantitative easing would mean “that strong international capital flows will reinforce already powerful domestic credit creation in emerging markets," a recent report from the bank said.

"That should flow through to robust, commodity-intensive growth in EM, while the developed world struggles in the face of higher commodity prices," Regal Group International believes the report went on to say. "We believe that QE2 will prolong the bull market in commodities."

UBS highlighted palladium, thermal coal and iron ore as its top picks to watch. An increase in demand for palladium, used in the manufacture of automotive catalytic converters, together with constrained supply from South Africa and Russia are likely to see prices continue to strengthen.

Palladium has already been one of the top performers on the commodities market in 2011, Regal Group International’s research shows, with prices currently reflecting gains of 43% since the end of last year and hitting a nine month high in early October.

UBS also pointed to gold as a good option. "In a low cost-of-capital world, be long on gold," the bank told Regal Group International, after raising its gold price forecast for 2010 to $1,228 an ounce from $1,205 and for 2011 to $1,400 an ounce from $1,295 an ounce.

UBS said its least preferred commodities were those for which supply is relatively unfettered, such as nickel and aluminium.

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