UBS sees Gold strengthening toward year-end
NEW YORK (Scrap Monster): Gold traders will be watching to see if bargain hunting emerges after the recent pullback that has taken spot gold to a five-week low. The loss of upward momentum in the short term means potential for the recent correction lower to intensify, said Zurich based bank UBS in a commodity snippet.
"But this also gives a window to those who have been patient enough to wait for cheaper prices to jump in," the Swiss bank noted.
"The challenge, though, is that it is often much easier to express the desire to buy the dip when prices are trending higher than to execute the trade when prices are weakening. A correction in gold will therefore act as a test for market participants who have held a positive but unrealized view on gold to prove their commitment by pulling the trigger once prices become more attractive," they noted.
The bank still sees gold strengthening toward year-end. "But a confirmation of support between now and then will be important for gold, especially with a sense of discouragement growing among market participants as gold remains in a somewhat sedate state," said the bank.
"A test of $1,700 psychological support would be an attractive area for buyers to enter--both physical users and opportune investors--and we expect a dip below this level to be short-lived," UBS concluded.
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