“We stay gold bulls,” UBS stated in a commodities overview. “Ongoing uncertainty about U.S. fiscal problems, with each other using the view that significant central banks will maintain loose monetary policies for longer, are important supports of our outlook. We also anticipate that the politicians will stop the U.S. from going over the fiscal cliff, with an 11th-hour agreement.”
Such a bargain wouldn't necessarily be unfavorable for gold, given its positive correlation with risky assets, and its lack of a fiscal premium, UBS stated.
“A compromise lacking specifics would advantage gold inasmuch because it disappoints these searching for long-run fiscal discipline,”
UBS recommended the upside price danger to gold from further Federal Reserve balance-sheet growth has been largely overlooked, although gold has tended to react more to monetary than to fiscal policy this year. Implementation of the European Central Bank’s Outright Monetary Transactions, plus additional Bank of Japan easing, would also support gold, UBS stated. A weaker outlook for the Japanese yen would also help gold, since this would mean some flight-to-quality flows might be redirected to gold, UBS stated. Continued official-sector purchasing will compensate for continued “sluggish”
“Silver is set to outperform in the present accommodative policy atmosphere,
particularly as danger sentiment remains usually buoyant,” UBS stated. “Barring any significant risk-off occasion, we anticipate this trend to continue in 2013 against the backdrop of QE (quantitative easing) in the Fed and loose monetary policy from other important central banks.”
For day-to-day paths, silver is most likely to look toward gold for guidance, UBS stated. In the end, investor demand will drive silver more-so than fundamentals like supply and fabrication demand, UBS stated. “The price is consequently most likely to become more buoyant than what might be recommended by supply and demand fundamentals,”
In the mean time, the threat of further South African supply disruptions is supportive for platinum, UBS stated. “We look to the bi-annual wage negotiation season in Q2/Q3 as a conflict occasion for the business, particularly in this area of potent labor unions,” UBS stated. “Also, UBS economics anticipate a better development story in 2013, that will support auto & industrial demand development.”
When it comes to Europe, greater emissions regulations should mean greater auto-catalyst demand development that compensates for ongoing weakness in European auto sales, the bank added.
On the other hand, UBS characterized palladium as the precious metal with the “most robust” fundamentals. Far better economic development should drive demand for auto catalysts at a time when supply continues to be constrained, with expected sales from shrinking Russian state inventories of just 200,000 ounces in 2013, UBS stated. My recommendation is to buy gold and buy silver today before the fiscal cliff has a hangover! How high will silver go? Learn more >> http://silverpricestoday.cc/