Gold's coronavirus rally has room to run, and it could jump 5% in the coming weeks, UBS said

• Gold's recent rally has further to run, and the precious commodity could rise to at least $1,800 per ounce in the coming weeks, UBS strategists Joni Teves and Giovanni Staunovo said at a press briefing Wednesday.
• Gold, which has rallied some 15% since mid-March, will likely push even higher as investors look to it as a safe haven during the economic turmoil caused by the coronavirus, Teves and Staunovo said.
• High levels of uncertainty and negative real rates of interest continue to keep gold in the spotlight as an attractive diversifier and a hedge against risk, they said.
• In 2021, UBS believes strategic interests in gold are expected to continue despite current high levels of exchange-traded-fund holdings.
• Watch gold trade live here.

Gold's recent rally has further to run, and the precious commodity could rise to at least $1,800 per ounce in the coming weeks, UBS strategists Joni Teves and Giovanni Staunovo said at a press briefing Wednesday.

The strategists outlined the Swiss bank's outlook for a range of commodities and how they will be impacted by the Covid-19 pandemic during the briefing, which Markets Insider attended via phone.

Gold, which has rallied some 15% since mid-March, will likely push even higher as investors look to it as a safe haven during the economic turmoil caused by the coronavirus, Teves and Staunovo said.

Here are some highlights from the briefing:

• Keeping in line with the long-held view that gold prices are primarily driven by dollar movements and rates, UBS continues to be positive on gold.
• Interest in gold this year — and the run up to the highs seen so far — have been a direct cause of oil falling into negative territory and the resultant broader uncertainty in the macro environment. This uncertainty led to a significant pick-up in investor interest in gold exchange-traded-funds seen globally.
• In the second quarter, gold is expected to make further gains as the impact of Covid-19 decelerates. Towards the end of the year, gold is expected to return some gains as the global economy recovers.
• In the near term, gold prices could potentially overshoot $1800 and is expected to settle around $1675. Eventually, a price of $1650 should find good support by the market.
• In 2021, strategic interests in the precious metal are expected to continue despite current high positioning levels of exchange-traded-fund holdings.

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• Demand for retail products such as gold coins and small gold bars have picked up significantly in Europe. Gold coin sales have been strong as well. That does not offset commodity weakness in key physical markets like China and India, but the interest in retail purchases signifies that gold continues to be a safe haven in times of uncertainty.
• Weakness in global growth, due to Covid-19, is likely to keep demand out of China and India for the foreseeable future. Overall supply and demand is "quite weak" and no significant improvements are expected throughout the remainder of the year.
• Central bank purchases — an important cushion in the market last year — are also slowing this year since foreign exchange rates have come under pressure.
• A highly uncertain environment and negative real rates of interest continues to keep gold in the spotlight as an attractive diversifier and a hedge against risk.

UBS' forecast for gold is somewhat less bullish than that of Bank of America, which said last week that it expects the price of the precious metal to hit $3,000 per ounce within the next 18 months thanks to huge central bank stimulus.

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Teves and Staunovo also briefly discussed the outlook for silver on Wednesday, saying that in the near-term it could rally in line with gold, but is unlikely to see any sustained gains.

That's because, the pair said, silver is much more widely used in industrial uses, meaning demand is likely to be weak during the global economic slowdown caused by the virus.

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