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UBS Commodities Chief Says Gold is "Best Bet"

Release Date: 
Wednesday, February 29, 2012

Gold and silver prices fell today after Federal Reserve Chairman Ben Bernanke commented on the U.S.'s encouraging job recovery and indicated that additional quantitative easing was less likely for the U.S. The price of gold was $1726 per ounce at 10:03 a.m. Pacific Time on the New York Spot Market with silver at $35.21 per ounce.

Market commentators continued to watch the euro zone following yesterday's announcement that the European Central Bank would make significant funds available to banks to help in refinancing. According to Peter Hickson at UBS, the company's Hong Kong-based head of commodities and basic materials research, the ECB's second major refinancing program in response to the European debt crisis is a form of quantitative easing. The LRTO could devalue currencies, which is fueling investor demand for gold, the analyst noted.

Hickson sees gold as a "best bet" in a portfolio. "Gold is likely to have a '2' in front of it some time this year," he said in a Bloomberg interview. "We've got $2025 (per ounce) at the end of the year. We're very confident about that. We're probably more confident about that than some of the other calls [in commodities]." That's our best bet at the time."

"The loose monetary policy also creates the specter of inflation down the line so it's gold positive," said Ross Norman, chief executive officer at Sharps Pixley.

(Sources: "Gold Expected to Rise to $2,025 in 2012, UBS Says," Bloomberg, February 29, 2012; "Gold steady after ECB cash injection to banks," Reuters, February 289 2012; "Gold futures pull back after ECB lending results," MarketWatch, February 29, 2012; "Gold tumbles, down 3 pct, after Bernanke comment," Reuters, February 29, 2012)

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