UBS says " gold in a reasonably healthy position for a rebound above $1300 towards the year-end through to early 2018"
They cite:
A few macro factors have been supportive of late:
- the pullback in the dollar,
- a pause in the rise in US nominal and real rates particularly on the long end,
- consolidation in equities,
- and political and fiscal uncertainty in the US.
- Latest political headlines out of Europe are probably helping at the margins, although currency moves could complicate the impact.
The gold market's correction and subsequent consolidation has generally been orderly.
Latest CFTC data shows that gold net long positions have been tentatively rebuilding over the past couple of weeks
- Although gold shorts increased for the first time in four weeks as of November 14, volumes were very modest.
A combination of resilient longs and hesitant shorts has helped gold form a decent base and enabled prices to climb above some support levels, improving the overall technical picture.
- we think gold's resilience is in large part due to lingering uncertainty; although macro risks in general are perceived to be lower, there is an acknowledgment that known unknowns and unknown unknowns continue to lurk.
- Additionally, some seasonal demand is likely also keep gold supported.
- Market participants have also indicated a preference to hold off until after the FOMC December meeting is out of the way.