Expect some degree of consolidation in gold over next 3 months: UBS

In an interview with ET Now, Peter Hickson, Global Head-Commodity Research, UBS, talks about the market and gold.

Peter Hickson: We have got a three month price target of gold at 2100 but within that context, we expect some degree of consolidation over the next three months. I think in the short term some pullback and consolidation is quite possible.

There is some potential as you see a consolidation phase for gold that people will in fact tend to defy with silver. Again in our forecast this morning, we have raised a price target for the next three months to $50 an ounce. So, we actually do perceive silver again attacking that number, if there is in fact some form of QE2 and some continuing easing in dollar, one would anticipate that investors would come back to oil, somewhat.

The other issue of course is the outcomes in Libya and there is a realisation in the marketplace that in fact oil production is in fact going to take in the order of 12 months before it gets back to full production. One still I suspect looks somewhat cautiously at the next month and the formation of the European stability fund and the political outcomes, there is still risk that things could go wrong and we could get a default situation. We could have another leg down that is clearly a risk in the marketplace in the next month or so.