Gold peaked? UBS: Without new catalysts, current levels may remain volatile
Gold prices have recently experienced a pullback, but UBS believes that investors can take advantage of this opportunity to increase their gold holdings. Geopolitical risks still exist, which may support the long-term gold market. In the short term, the gold market may enter a consolidation phase, but if geopolitical tensions escalate, it could increase the inflow of safe-haven funds into gold. Investors may take profits and sell some of their positions, but market positioning indicates that investors are still holding a bullish stance on gold, which is favorable for a long-term bull market. UBS maintains a bullish view on gold
On the overnight of April 23rd, the price of gold once fell by 2.54% to $2330.23 per ounce during the trading session.
The recent pullback in the price of gold has raised market concerns. After reaching a historical high this year, will the price of gold continue to rise?
On April 19th, UBS released a research report titled "Global Precious Metals Review," indicating that unless geopolitical risks escalate, gold may enter a period of consolidation.
Recently, due to the tense situation between Israel and Iran, the price of gold briefly exceeded $2400 per ounce, but this upward trend did not last.
In the short term, the market's short-term reaction to such geopolitical news is usually intense and unstable. The market is nervous about the uncertainty over the weekend, which may provide some support for the price of gold in the short term.
UBS predicts that gold may enter a period of consolidation in the short term.
If geopolitical tensions ease, the focus of the gold market may shift to a consolidation phase. UBS points out that this phase may have already begun in the past week.
If geopolitical risks escalate, there may be an increase in "safe-haven" funds flowing into gold. Persistent geopolitical risks will eventually support the demand for gold, as investors may seek to use gold as a diversification tool in their portfolios and as a hedge against potential market instability.
Although some investors are concerned about selling gold prematurely to take profits, given the significant rise in the price of gold, UBS believes that market participants may eventually lean towards selling some of their positions to lock in profits.
UBS emphasizes that while current data does not show overcrowding in gold trading, market positioning (i.e., the overall position of investors) has become a focus of market participants. Data shows that net long positions in gold have been hovering near 12-month highs recently, and Commodity Trading Advisors (CTAs) have reached their maximum long positions.
UBS believes that the healthy pullback in the price of gold indicates that the market is able to form a support base at higher levels. This will help strengthen investors' confidence in the long-term bull market for gold.
Therefore, UBS maintains a bullish stance on gold, believing that any price pullback is an opportunity for investors to increase their holdings in gold.