By Dr. Renisha Chainani, Head- Research, Augmont – Gold for all
Chaos in the Middle East continues to generate a geopolitical safe-haven bid in the Gold and Silver market, but there are signs that the precious metal’s bull run is losing momentum.
Gold’s future is not promising in the immediate term as the market may begin to focus on more fundamental market factors after geopolitical concerns have stabilized. Even though markets have delayed the Federal Reserve’s rate reduction until later this year, the precious metal has managed to consolidate in record territory.
It appears that a rate cut in June is very uncertain, and the CME FedWatch Tool projects a rate cut in July at almost equal chances. I’m concerned that one morning this market may awaken to find that rates and the dollar have both dramatically increased and that the likelihood of rate reduction has all but vanished. I think Gold and Silver won’t be able to hold up Middle-East war premium for a long time, and soon we will see price retracement or correction. The path of least resistance points north, even if gold has lost the majority of its gains after Iran played down the significance of Israel’s assault. Due to the upcoming US Q1 GDP and PCE report, which might affect Fed cut bets, the following week may see increased volatility for the precious metal.
Talking technicals, Gold bulls need to keep prices above $2415 (~ Rs 73300) for another test of $2450 (~Rs 74000) and $2500 (~Rs 75000). Weakness below $2350 (~Rs 71700) could open a path towards $2320 (Rs 71000) and $2300 (~ Rs 70600). While Silver needs to sustain above $29 (~ Rs 84000) to head higher towards $30 (Rs 86000) and weakness below $28 (82000) will open the path for $27 (~ Rs 80000).
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