UBS Remains Salient on Gold
The macroeconomic forces justify the strength in gold since mid-May according to UBS
“In particular, lower rates, weaker dollar and broader uncertainty provide a good foundation for the market to continue its journey higher
The uncertainties include central-bank meetings and global political risks, UBS explains.
“We've argued gold's role as a diversifier in investor portfolios, and this is becoming increasingly relevant in the current environment. Despite the rally from the lows printed in May, we think gold positioning is not crowded overall and there should be room for the move to extend. While a pause is understandable around key resistance levels and ahead of key events in the near term, the market should stay supported overall and would view dips as an opportunity to build/add to positions.
Our Take:
That does not mean a sell-off of $50 is not in the works. It just means that UBS is saying the previous moves higher are supported by the macro situation. Most importantly, UBS is implying that Gold is not overbought here. And then there is always the risk that analysts are being leaned on by their sales department. Your calculus should adjust accordingly.
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