UBS says that the recent gold price action seems to be counterintuitive from a safe haven standpoint
"Gold has fallen about 3% since late June, in spite of the escalation in Greek risks and weakness across equity markets. Gold's 20-day correlation with the S&P500 Index moved into positive territory in the last couple of months, reaching as high as 0.47 in mid-June, before falling back towards neutral/slightly negative," UBS adds.
"Meanwhile, the possibility of Greece exiting the Eurozone is not really encouraging more safe haven buying right now. In reality, weakness is currently being felt across commodities and in relative terms, gold is actually doing better than other assets in this space," UBS argues.
"For now, the $1150 psychological level seems to be holding well and the bounce from the lows today may provide some comfort at this point. But even though a closer look at the details explains gold's price action, there is still a risk right now that gold's lack of 'traditional' safe haven response could disappoint some participants and weigh further on market sentiment," UBS projects.
