UBS on precious metals, gold in particular. They note strong resistance around US$1300
In brief:
Gold meets resistance at $1300 yet again... That the market is running into strong resistance around these levels is not surprising
- $1300 is an important psychological level
The impact of geopolitical risks on gold prices is difficult to anticipate and generally tends to be quite volatile and headline-driven.
- Nevertheless, that the downside in gold has been relatively contained despite fluctuations in risk appetite over the past few weeks suggests that there's an underlying appetite to hold gold as a safe haven and a hedge against potential tail risks.
An important question for many market participants at this point is what could drive gold prices to breach the $1300 key level.
- Dovish monetary policy, especially from the Fed, and/or significant escalation of geopolitical risks are potential triggers - we expect the former to have a more durable price impact.
- Jackson Hole Symposium ... While there is little expectation for significant news any hints on policy normalisation paths and views on inflation are likely to gather much attention from markets
Positioning in gold and palladium warrants some caution in the near term
- positioning in gold has increased considerably as of 15 August
- Net longs added nearly 4moz, bringing speculative positions to 20.04moz. Gains were mainly due to gross longs extending positons - the relatively sizeable increase in the past week presents some near-term risks and somehow raises the threshold for a convincing topside break.
- Net long positions in silver, platinum and palladium similarly gained sizeably, but unlike gold these gains were mostly driven by short-covering.
(bolding is mine)