Gold prices have been under pressure ever since the rally in global stocks and dollar following Donald Trump’s victory in the U.S. elections. But a report from UBS says that investors are scaling back optimism that emerged shortly after the U.S. elections, and this is reflected in the recovery of gold prices.
“We think this is warranted and see room for gold to extend upwards as markets digest uncertainty around U.S. fiscal policy. But gold has also recovered considerably and market uncertainty at this point could encourage investors to lock in whatever profits they can for now, especially as seasonal gold demand fades,” UBS said in a note.
With the Lunar New Year holidays starting in China on Friday and markets closed next week, demand for gold will see a decline, the report said. Gold prices have drifted down a bit ahead of the Chinese festival. The precious metal is trading nearly 8 percent higher over a 12-month period but is down more than 6 percent since the U.S. elections.
“We think gold’s performance, as the typical Q1 seasonal demand fades, should provide a good gauge of investor sentiment towards gold at this point.”
Source: Netral News