LIVE MARKETS-Consolidation in gold bodes well for next leg higher

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CONSOLIDATION IN GOLD BODES WELL FOR NEXT LEG HIGHER

Since hitting a record high in April, spot gold has been cosolidating in a range of $3,120-$3,500/oz, but UBS analysts believe the bullish outlook remains intact.

"High levels of uncertainty around U.S. tariffs, fiscal policy and the Fed's consequent response reinforce the appeal to diversify portfolios, wherein gold stands out as an attractive option," writes UBS strategist Joni Teves.

"We think gold is one of the cleanest ways to position against macro uncertainty, dollar weakness and growing concerns about the rising U.S. fiscal deficit and ballooning debt."

With summer approaching in the northern hemisphere, Teves believes a move higher in gold could be amplified by thinner market conditions.

"It likely does not take a lot of volume to move the price in the current environment," Teves says.

"Looking ahead, we continue to see further upside in gold...as growth data weakens and the prospects of rate cuts increase."

(Samuel Indyk)

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