A string of recent losses has seen gold walk back from the $2,000-plus level, but Swiss bank UBS is among those who see a buying opportunity and a return to...
A string of recent losses has seen gold walk back from the $2,000-plus level, but Swiss bank UBS is among those who see a buying opportunity and a return to that price range.
Gold GC00 GCM23 is now sitting 4% below its year-to-date high reached earlier this month, noted a team of UBS strategists led by Wayne Gordon. Closing at its weakest since a late March low on Thursday, gold is set for the worst week since October last year, dogged by a strong U.S. dollar DXY and optimism around a debt-ceiling deal in Congress.In a note dated Thursday, Gordon and the team said investors shouldn’t be too surprised by the consolidation seen in gold after such a strong rally.
Broad U.S. dollar weakness is a second reason to buy, and investors should expect headwinds for the greenback to intensify as a Federal Reserve pivot to lower interest rates looks possible, maybe in the second half of the year, said UBS, which added that the European Central Bank will likely keep tightening monetary policy by contrast.
Shah noted that investors have been hedging in gold futures since the collapse of the California’s Silicon Valley Bank earlier this year, with positioning weak in the run-up to that crisis. Flows into exchange-traded-products have been less dramatic, but the analyst said an investor return to those “in significant force” could provide a major push to gold.
Read: If the Fed cuts interest rates during a recession, it would be ‘the worst of all possible worlds’
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