UBS: Gold initially showed signs of stabilization after falling 5%

The Zhitong Finance App learned that UBS released a research report saying that due to better-than-expected data and ongoing concerns about inflation, the price of gold has dropped by about 5% since the beginning of September due to renewed expectations that the Federal Reserve will further tighten its policy. The bank believes that most of the impact of recent hawkish repricing is now reflected in gold prices, which initially shows a more favorable time to enter the market.

During this period, the yield on US 10-year Treasury bonds rose from about 4.8% to over 5.3%, the US dollar index rose from about 100 to above 102, and gold fell from more than 4,400 US dollars per ounce to about 4,140 US dollars. This trend echoes the hawkish repricing that followed Walsh's speech at the Jackson Hole Annual Conference in late August. Strong economic growth and labor market conditions challenge expectations of continued easing, making the market think that the possibility of another rate hike before the end of the year increases, putting pressure on the price of gold.

The bank believes that after this round of adjustments, gold has consolidated around 4,140-4,200 US dollars per ounce, weak labor market data released at the end of the month, and market expectations for the Fed's interest rate hike in October have eased, indicating that the resistance brought about by monetary policy may begin to weaken. This is insufficient to confirm that a firm bottom has been formed, but supports the bank's judgment that the balance of risk has become less negative.

On the technical side, the bank sees $3,990-4,030 per ounce as the key support range in the near future. Although the price of gold is still below its short-term moving average, most of the impact of recent hawkish repricing appears to have been reflected in the price. If it clearly falls below $4,000 per ounce, it means that the adjustment may further deepen; if it continues to rise above $4,280-4,320 per ounce, it will represent a significant improvement in technical momentum and reinforce the judgment that the recent decline is still only a consolidation in the upward trend.