Seeking Alpha: UBS Says Buy the Dip in Gold at $2,600/oz or Below, Hedges Still Required
Article by Seeking Alpha
Gold prices fell by 3% following the confirmation that Donald Trump had won the U.S. presidential election, but prices have rebounded by around 1% the day after. The near $100/oz drop on Wednesday is reminiscent of 2016, UBS said in its latest note.
Spot gold was down 1.6% for the week on Friday.
"The reaction was surprising, with participants likely assuming that campaign rhetoric will not fully translate into policy. However, with a red sweep looking likely, we believe the demand for hedges will return despite the risk-on shift...," analysts said.
Moreover, the election result resolves some near-term concerns such as a contested election, a debt ceiling standoff, a government shutdown, corporate tax increases, and increased regulation.
So, despite recent setbacks, UBS recommends buying the dip in gold at $2,600/oz or below for three reasons. It also keeps .......