IANS | 15 Sep, 2023
The prices of gold is expected to trade in the broad ranges already
set with $1,880 and $1,830 acting as strong support levels in the near
term, according to a report by Emkay Wealth Management.
Gold is currently trading at $1,960, and has been fluctuating in the range of $1,880-$1,960 during the last one month
During
the previous two months gold ETFs witnessed outflows, however during
the recent weeks some inflows started trickling in that have helped the
yellow metal.
The
movement in gold is inextricably intertwined with two fundamental
factors, the trajectory of US interest rates, and the direction of the
US Dollar.
The currency outlook has been positive owing to the north-bound interest rate outlook.
Gold
gained ground based on the uncertainties around the US economic
performance and the possibility of the economy degrowing substantially,
but these uncertainties turned out to be false alarms as the US jobless
claims data beat analyst expectations.
However,
the major concern among traders is the economic sluggishness and the
magnitude at which is happening in some of the developed countries is
not likely to push gold demand higher, the report said.
The
last address of the US Federal Reserve Chairman states in no unclear
terms the need to hike rates to control inflation, and he acknowledges
the probability of below-trend growth in the short term due to interest
rate actions.
Multiple
factors have accorded gold a place in investor portfolios in the last
three to five years. These include geopolitical developments, interest
rates, economic growth prospects, the need to diversify portfolios, the
rising price level, etc.
At
this juncture, inflation continues to be the singular factor that is
supporting gold prices apart from the generally weak global economic
outlook, the report said.
More
than this, the very hawkish stance of the US Federal Reserve is a
matter of concern, as the central banl has already reaffirmed its
commitment to keeping its inflation target of 2 per cent intact, and it
will not rest until the goal is reached.
The end result is that rather than inflation and uncertainties which
could have given Gold an edge but the Fed's fight against inflation has
assumed greater importance after the Jackson Hole meet which will see
gold trading in a narrow range in the near term, the report said.
