Will gold prices rally last? This is what may break Gold’s winning streak

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Published: June 26, 2019 4:12:07 PM

The US-China trade conflict, geopolitical tensions in the Middle East, uncertainty around Brexit along with global growth concerns have been supporting the gold prices of late.

Gold is likely to rally further amid rate cut expectations next month

The US-China trade conflict, geopolitical tensions in the Middle East, uncertainty around Brexit along with global growth concerns have been supporting the gold prices of late. Gold prices are on a rally this year and gold price in India touched an all-time high on Tuesday following global cues. On the Multi Commodity Exchange or MCX, the gold is trading lower at Rs 34,250, down Rs 320 per ten gram. Globally also, gold prices fell more than 1 per cent on Wednesday, moving away from a six-year peak hit on Tuesday, as US Federal Reserve officials tempered expectations of aggressive rate cuts. The yellow metal was trading lower by 0.57 per cent at USD 1,410.60 per ounce in New York.

The experts are expecting further rally in the gold prices as the present global pressures don’t seem to subdue. There is also a hope around policy rate cut by the US Fed in the next meeting. “As the present pressures do not seem to be ebbing, the market is not ruling out a further upward movement in the range of $ 1450 in the next few months which can be the next testing point. It is largely expected now that the Fed will lower rates in its next meeting and can be the next trigger for a spike in price, though the Fed Chief Mr Powell has reiterated that it cannot be taken to be a ‘given’,” Care Ratings said in a report.

However, there is a section of market participants who still view the present rally with caution and would like to see how the US-Iran and US-China relations evolve as this will have a bearing on the gold prices. The slower growth in the USA and a weaker dollar with low interest rates would be the fundamentals to watch out for, according to the rating firm.

“Comex gold having climbed by nearly 10% in June, has witnessed profit booking. We believe so far as $1,390 is not breached on a lower side, the sentiment should remain on a positive side with focus on G-20 meet. Any adverse developments in US-Iran geopolitical relations may support additional support. Hence, we recommend to use this dip as a buying opportunity and go long. The US, yesterday, posted a weak set of economic data. Fed’s chairman Powell also reiterated about the possibility of a rate cut in coming months. Hence, undertone in the yellow metal should remain positive,” Jigar Trivedi, Fundamental Analyst – Commodities, Anand Rathi Shares and Stock Brokers, told Financial Express Online.

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