September 10, 2012
UBS sees gold leaping to $1,850 within a month
By Darcy Keith
Raises near-term price targets on belief that Fed easing will prompt rally
These are some of the key analyst actions on the Street today.
UBS believes gold is poised to take a sharp turn higher amid growing expectations that the U.S. Federal Reserve is about to unleash a third round of quantitative easing.
Friday's ugly U.S. jobs report means there is now "a strong likelihood" of the Fed action after its monetary policy meeting wraps up on Thursday, UBS analysts said in a note, and this "sets the stage for the continuation of the precious metals rally."
UBS raised both its one-month and three-month gold forecasts to $1,850 (U.S.) an ounce. They were previously $1,700 and $1,750, respectively. That implies a more than $100 bounce from where gold is trading at today.
But it's not just gold UBS is bullish on: It thinks silver is going to shine too, and will actually outperform gold in the near term. It raised its one- and three-month silver forecasts to $37 (U.S.) an ounce. They previously were $32 and $35, respectively.
Precious metals equities, UBS believes, are going to benefit. On average, it raised its price targets in the gold sector by 12 per cent and in the silver sector by 18 per cent.
But it did highlight three companies investors should refrain from buying right now, because of their recent run-up in stock prices: Franco-Nevada Corp., Royal Gold Inc. and Hecla Mining Co. It downgraded all three from "buy" to "neutral."
