Gold can scale record high of $2,100 on robust demand, says Emkay Wealth

On COMEX, the record high for gold prices stands at $2,082 per ounce, which was hit in March 2022.

Gold prices are likely to hit record highs on the back of robust safe-haven demand as fears of a possible recession in the US grow, Emkay Wealth Management said in a note.

Emkay Wealth, an advisory arm of Emkay Global Financial Services, expects Comex gold to inch up to $2,080 a troy ounce and even hit $2,100 in the coming months.

The highest gold has risen on Comex is at $2,082 in March 2022.

“There is a feeling among some of the Fed officials that the stress in the banking system (in the US) will only accelerate the arrival of the recessionary conditions earlier than expected. This will also keep gold fairly well supported,” Emkay Wealth Management said in a note.

The collapse of several banks, including Silicon Valley Bank in March, raised fears that negative impact could spill over to other sectors as well. Experts have said that the banking crisis in the country is far from over.

“What propelled gold recently has been the uncertainties around the US banking system, and also related developments in Europe, and the fears that it could spread to other territories as well,” Emkay Wealth said in the note.

The banking crisis in the US also raised hopes among investors that the Federal Reserve would likely pause the interest-rate hike cycle at the upcoming policy meetings.

“The initial factors that favoured gold were the high probability of a moderation in the approach of the central banks to further tightening of the monetary policy,” according to the note.

However, Fed Governor Christopher Waller recently said that the US central bank had not made much progress in controlling inflation in the country and interest rates needed to rise further.

Emkay believes that the only risks to gold’s upside is a stronger dollar and if the Fed continues to raise interest rates in the US.

“The support levels remain at 1960 and 1930, and the chances of these levels being broken remains very remote. In fact, it was attempted once and it bounced back from those levels,” Emkay Wealth analysts wrote.

At 2.36 pm gold was at $2,023.05 on Comex, up 0.4 percent from the previous close. The June gold contract on Multi Commodity Exchange of India was at Rs 60,556 per 10 grams, up 0.4 percent as well.

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