UBS considers weakness in gold to be a buying opportunity, as the
metal has declined since the Federal Open Market Committee signaled Wednesday a rate hike is still
possible in December.
The “relatively
contained response so far is somewhat encouraging,” UBS said as gold net-long positioning had risen
sharply.
UBS explained that a rate increase in December would pressure gold and "given the recent gains in positioning could mean a deeper correction than would have been otherwise, as weak longs get washed out,”
“This could present a good buying opportunity for physical buyers in
China who need to stock up for the Lunar New Year festivities, albeit
perhaps a bit early given that the holiday falls in the second half of
February next year."
"We believe opportunistic investors who remain skeptical about the global macro environment should also view any weakness ahead as a chance to re-establish positions at better levels.”
December Comex gold last traded at $1,153.30 an ounce while December Comex silver was last seen at $15,730 an ounce, down 3.46%.
