Gold: sustained move higher appears unlikely – UOB

FX Strategists at UOB Group remain unconvinced of a move higher in Bullion on a more sustainable basis.

Key Quotes

“Elevated geopolitical risk and renewed risk aversion reinforced the long term need for gold as a portfolio diversifier of risk and fed the strong move in gold higher towards the key resistance of USD 1,300 / oz”.

“While the Fed appears divided over the uncertain US inflation outlook, there is broad consensus that they will embark on “Balance Sheet Reduction” BSR “relatively soon”. As such, US yield curve may steepen yet again and limit any sustained move higher in gold”.

“Furthermore, technical indicators remain inconclusive for a sustained move higher in gold. As such, investors can take advantage of low implied volatility to position for possible upside in gold via XAU call options”.