By Will Martin
The price of gold will continue to shoot up in 2016, and has now "entered a new phase" of growth in the post-Brexit world, thanks to a variety of macroeconomic factors.
The gold price has increased 24% this year so far.
And the risks to the global economy will make it the go-to investment for the rest of 2016, according to UBS strategist Joni Teves in a note circulated to clients on Tuesday.
As a result, Teves and her team have increased their annual forecast for gold to an average of $1280 per ounce, compared to $1225 previously. Teves notes that she expects an average gold price for the rest of 2016 of roughly $1340, and in the short-term, gold will likely hit $1400 per ounce.
Teves notes that she expects an average gold price for the rest of 2016 of roughly $1340, and in the short-term, gold will likely hit $1400 per ounce.
Here's the key reasoning behind that forecast, from UBS' Global Precious Metals Comment note (emphasis ours):
Key drivers include: 1) low/negative real rates, 2) the view that the dollar has peaked against DM currencies, and 3) lingering macro risks. We expect the next leg to be driven by an extension of the trend of strategic portfolio allocation into gold from a diverse set of investors. This trend should now deepen, attracting more participants and encouraging those who have been hesitating to get more involved. Relatively orderly retracements, which have typically been shallow and brief indicates strong buying interest. This suggests that gold's floor is likely higher now given an even stronger fundamental argument for holding gold.