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Fed’s dovish commentary and fears of slowdown of the US economy were positive news for bullion and came at a time when gold appeared to be losing its appeal. What is the outlook for the yellow metal and silver for this week and in the medium term?
Federal Reserve Chair Jerome Powell indicated in his press conference that an interest rate cut could come as soon as September after the US central bank voted to leave its benchmark rate unchanged at its Wednesday meeting. Last week’s weaker than expected US macro data signals the economy is cooling, raising the possibility of aggressive rate cuts this year to boost the US economy. This scenario supports gold, as lower interest rates are beneficial to non-yielding commodities like gold.
Our view remains bullish on gold. In the $2,480–$2,500 zone, Comex gold faces immediate resistance. If the price crosses this level, it will move into uncharted territory. For silver, we believe the price is likely to consolidate in a broader range of $27 to $32 with a moderate positive bias.
Since the cut down in the customs duty on gold in the Budget 2024, has the demand/imports increased?
We believe medium- to-long-term imports are likely to increase due to lower import duties. Because jewellers have a higher inventory, short-term imports are likely to remain stable.
What targets do you see for gold and silver and what should be the trading strategy?
For gold, our view is bullish, and inventors should remain long in gold. For levels specifically, Comex gold can rise above $2500/oz soon and the price can rally towards $2,545/$2,580, with support at $2,419/$2,380. In silver, we believe the price is likely to consolidate in a broader range, as weaknesses in industrial metals negatively impact silver prices.Do you see any impact of Sebi crackdown on equity derivatives on commodity futures. The logic is that traders will still want to trade and could shift to commodities?
Yes it may be positive for MCX as traders will shift from equity derivatives to commodity derivatives. As commodity derivatives are available for trading, hedging and arbitraging so trade can take advantage of these from commodity segments.Oil has been in a downward trend amid fears of slowdown in US and weak China demand. Where do you see prices of Brent and WTI heading to and what should investors do?
So far this year, oil prices have been sideways, trading in the range of $15 to $20 with a bearish bias. China’s weak demand outlook, coupled with the recent weakness in the US, heightens the likelihood of a recession, which in turn impacts the outlook for oil consumption. On the supply side, US supply is likely to increase, while OPEC and its alliance will gradually return their supply to the market. Both cases have a negative impact on oil prices. We anticipate Brent crude to fall toward the $70.0 level, while WTI crude will decline toward the $65.0 level soon.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)