Forex Institutional Research: UBS Gold & Platinum

Forex Institutional Research: UBS Gold & Platinum

Key quotes from the report: 

UBS GOLD Positioning Jumps To Highest In Four Months

UBS Gold net speculative positions added 4.29moz to reach 13.16moz, the highest level since October, according to CFTC data as of Feb 9. The increase in gold net longs was driven by fresh longs rather than short-covering. This suggests that some longs that built positions between $1125 and $1200 are likely booking profits here. Short covering did not seem to take place until the break of $1200, but as the data does not capture the move towards $1260, we will have to wait for this week’s CFTC report to receive more clues’

Physical Demand Seasonality Offers Little Support For Now

“The immediate risk for gold in our view is that physical markets are not likely to be in a hurry to step in here. Seasonal factors are at play: Indian demand is unlikely to pick-up until we get closer to the Akshaya Tritiya festival on May 9, while activity in China typically slows down after the Lunar New Year. It seems to be therefore up to opportunistic investors to offer gold support, and this could act as a test of conviction – whether or not there is something more fundamental to gold’s performance so far this year’

Platinum Net Longs Gain The Most

Positioning in the rest of the precious metals similarly gained during the period. Silver net longs were up by 74.44moz to 298.51moz on a combination of fresh longs and short-covering; while the net increase in PGM positioning was mostly driven by shorts closing out positions. Platinum stands out with a chunky 374.30koz increase in net longs, the second-largest weekly gain on record and was mainly due to short-covering. This puts platinum in a precarious position in the near-term, with net positioning now at 56% of the record, the second most crowded after silver at 61%

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