"Stay long on gold" UBS

13.02.2017 / 06:47

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A rally in gold prices has room to run on risk concerns from politics to interest rates, so hold on to those long positions, a UBS analyst said Monday.

"There's plenty of uncertainty out there," said the bank's commodity and Asia-Pacific commodity head, Dominic Schnider. Top among consideration is the pace of interest rate hikes from the Federal Reserve, he added.

"Inflation is going to accelerate faster than the Fed is going to hike rates; that's good for real assets. "

UBS expects two rate hikes this year because it sees the Fed as cautious until policies proposed such as tax cuts and higher spending actually get legislative nods as currently proposed.

"There's a lot of uncertainty here. For the Fed, in the current environment, this means: 'yes guys, we are going to normalize rates but it's going to be slow moving. Give us a little bit of time, let us assess the situation.'"

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"Stay long on gold" UBS

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