Morgan Stanley, UBS Raise Gold Price Forecasts

Source:

"The key to where gold heads from here is in the concerns about the banking sector."

Morgan Stanley and UBS raised their gold price forecasts on Wednesday, citing safe-haven demand for bullion amid turmoil in the banking sector and a gloomy outlook for the economy.

U.S. bank Morgan Stanley (MS.N) raised its 2009 gold price forecast to $900 an ounce from $750 previously, and its 2010 price view to $1,000 from $825.

"Gold prices are likely to be higher by year-end in the context of aggressive monetary stimulus and falling confidence in paper money," the bank said. It added, however, that deflationary worries and a strong dollar could weigh on prices early in the year.

UBS (UBSN.VX) said it now sees gold at $900 an ounce in one month, against a previous forecast for $800, and at $850 an ounce in three months, also against $800.

"Our client flows suggest that the developments in the banking sector have truly spooked investors again, with strong demand for coins and small investment bars seen since the start of the week," said UBS strategist John Reade in a note.

"The key to where gold heads from here is in the concerns about the banking sector," he added.

Related Articles

Get Our Streetwise Reports Newsletter Free

A valid email address is required to subscribe