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Business News/ Economy / Gold may trade between $1,880-1,960 in the near term, says Emkay Wealth; here's what the brokerage says

Gold may trade between $1,880-1,960 in the near term, says Emkay Wealth; here's what the brokerage says

Gold prices expected to trade in established ranges, with support levels at $1880 and $1830. Inflows into gold ETFs aiding prices. US interest rates and inflation driving gold prices. Fed's hawkish approach causing concern.

Gold may test levels of $1880 but has strong resistance at $1830 in the near term: Emkay Wealth Management Premium
Gold may test levels of $1880 but has strong resistance at $1830 in the near term: Emkay Wealth Management

The prices of yellow metal are anticipated to trade in the large ranges already established, with US$ 1880 and US$ 1830 acting as significant support levels in the short term, according to a research by Emkay Wealth Management titled "Navigator". According to the study, gold is presently trading at US$ 1960 and has fluctuated between US$ 1880 and US$ 1960 over the past month.

Gold ETFs witnessed outflows over the previous two months, but in recent weeks, a small amount of inflows have started to trickle in, which has aided the price of the yellow metal, said Emkay Wealth in its report.The direction of the US Dollar and the trajectory of US interest rates are two fundamental variables that are intricately linked to the movement in gold. Due to the expectation of rising interest rates, the currency outlook has been favourable.

The US unemployment claims report exceeded analyst estimates, proving that the concerns about the US economy's performance and the likelihood of significant economic contraction were unfounded. The economic sluggishness, which is most prevalent in several wealthy countries, is what traders are most worried about, and its severity is unlikely to increase demand for gold, according to the report.

The Fed Chairman's final speech makes clear that rates must be raised to control inflation, and he acknowledges the possibility of short-term below-trend growth as a result of interest rate moves. In the past three to five years, a variety of reasons have allowed investors to include gold in their portfolios. These include changes in geopolitics, interest rates, the likelihood of economic growth, the requirement to diversify portfolios, the increase in price level, etc. Apart from the generally gloomy outlook for the global economy, inflation remains the only thing driving gold prices at the moment, explained Emkay Wealth in its report.

More than this, the US Fed's extremely hawkish approach is cause for alarm because the Fed has already reaffirmed its commitment to maintaining its 2% inflation target and its determination to pursue the target until it is achieved. As a result, gold will trade in a constrained range in the near term as the US Fed's fight against inflation has taken on greater prominence in the wake of the Jackson Hole meeting rather than inflation and uncertainty, which may have given Gold an edge.

Also Read: Gold price trades range-bound on US Fed rate hike worries. Buy or wait for more correction?


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Updated: 18 Sep 2023, 05:13 PM IST
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