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Gold upside lacks strength? – UBS

FXStreet (Edinburgh) - Strategists at UBS poured cold water over the recent spike of the precious metal above the critical $1,300 handle.

Key Quotes

“That gold prices had managed to hold at the 200-day moving average, despite a couple of attempts to break the downside, could well have lured short-term players back in”.

“Technical buying was likely amplified by the break of the 50-day and 100-day moving averages, especially considering generally thin liquidity of late”.

“But while a move above $1,300 is encouraging, the market’s hesitation is also quite evident, with follow-through clearly lacking. Once again this move is due to technicals and spec activity – strategic interest isn’t visible”.

“Despite gold reclaiming a $1,300+ price tag, the reality is that the market remains trapped within the established range”.

“Lingering geopolitical risks prevent shorts from taking action. But there is no strong incentive for longs to aggressively pursue gold higher either”.

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