Wednesday August 24, 2016 09:02

UBS looks for any potential damage from Federal Reserve hawkishness to be limited. “The focus this week will be Fed Chair Yellen's speech at Jackson Hole, where investors will look for guidance on Fed policy,” UBS says in an early-week research note. “We expect Fed comments to hint at the potential for a hike later in the year – improving U.S. data and hawkish comments from the Fed could weigh on gold, especially given positioning has lingered close to all-time highs.” Net speculative length on Comex as of Aug. 16 was around 91% of the all-time high, despite a decline over the past six weeks, UBS says. “Having said this, we think the gold trade is not overcrowded and any downside should ultimately be limited amid lurking interest to buy dips. We have held the view that the impact of Fed policy decisions to gold are not as straight forward in this environment where global yields are under pressure and macro uncertainty is elevated. While gold is likely to come under pressure ahead of a Fed rate hike – which we expect to occur in December – we would view the dip as a buying opportunity.”