The interesting thing about gold right now is that the strongest buyers may also be the least interested in what happens over the next few weeks. China is securing physical metal, refinery capacity is tightening and the structural reasons for holding bullion remain largely intact. But the financial market has just experienced a painful reminder that even a good long-term investment can become a very bad short-term position when leverage starts coming out.
• UBS sees gold caught between exhausted speculative positioning and persistent physical demand, with traders reluctant to rebuild exposure after last week’s punishing liquidation.
• The heaviest selling was concentrated in a single session, but physical buying from China has continued, with demand for kilobars arriving earlier than usual and refinery capacity becoming increasingly difficult to secure.
• UBS technical strategist Jason Perl has shifted bullish following completion of his minimum correction target, although the market still needs to clear $4,082.80 to confirm a more convincing recovery.
• Silver remains considerably less reassuring, with UBS maintaining a neutral technical outlook and warning that price action remains unusually sensitive to headlines and positioning.