Swiss Bank UBS urges investors to keep their nerve
Daryl Jackson, News Editor
14 Feb 2017, 4:43 p.m.
It's no surprise at the moment that the gold price has been hit by the election of Donald Trump as president of the United States of America.
Despite that, Swiss bank UBS is saying that investors need to hold their nerve.
Speaking to CNBC - UBS head of commodities Dominic Schnider expects the price for an ounce of gold to rise to $1,300 from current $1,230. Part of the reason behind the expected increase in the gold price is a bet against the policies of Donald Trump.
There was shock after the election back in November, 2015. The price of gold fell in the aftermath after the election while other investment products appreciated.
The good news is that gold has recovered and is up 7 percent since the beginning of the year. And UBS believes the rally will continue.
Schnider told CNBC that the main reason for the expected increase is uncertainty. Analysts are waiting to see how quickly the U.S. Federal Reserve will raise interest rates. The central bank announced it will do so in three steps, triggering a monetary policy debate in the world's largest economy.
Schnider expects the Fed to lag the rate of inflation, which he said is good for the price of gold.
The gold price will profit if the promised injection of money into the crumbling infrastructure remains elusive and the economy grows more slowly than expected, Schnider said.