The latest 'Global Precious Metals Comment' piece from UBS (in brief)
Gold is trading precariously below the 100-day moving average
- It would seem that tensions in Catalonia have not really attracted safe haven flows to gold, which is in line with the limited impact on other markets as well
The market has been weighed by the dollar and real rates pushing towards the highest levels in over three months, while equities continue to make new highs. Prices have also fluctuated as markets contemplate who is likely going to be appointed as the next Fed Chair, anticipating the potential impact on the policy path. The impact on gold largely comes through from the reaction of the dollar and rates.
- An announcement of Chair Yellen's successor could come this week and reports indicating that J. Powell is the likely choice could lead to some consolidation in the dollar as the "Taylor-premium" is unwound further. A pullback in USD & real rates would offer some relief to gold here.
However, headwinds linger for now:
- the US Congress debate on next year's budget and tax reform due to this week and the December FOMC meeting, when market expects the Fed to hike rates.
This suggests that further consolidation is likely in store.
