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Gold likely to remain choppy amid challenging global economy: Kotak Securities

Gold may remain choppy amid lack of clear cues however general bias may be on the upside owing to increasing challenges to global economy and hopes of dovish stance of major central banks.

September 15, 2020 / 03:16 PM IST

COMEX gold trades moderately higher near USD 1970/oz after a 0.8 percent gain on September 14. Gold rose yesterday after a 0.8 percent decline on Friday. The mixed trade shows a lack of direction in the market. Price continues to remain stuck in a broad range of USD 1900-2000/oz and unless there are major triggers we may see directionless trade continuing.

Choppiness in the equity market and US dollar is affecting gold. US equity market edged up yesterday attempting some recovery after two weeks of losses. The US dollar index has turned choppy after hitting a 4-week high last week. Market players are positioning for upcoming central bank meetings with the general expectations that central banks may maintain their accommodative stance.

US Federal Reserve, Bank of Japan and Bank of England are due to hold their monetary policy meetings this week, and while no change in monetary policy is expected, market players want more clarity on future front. Fed meeting will also be watched to get more clarity on the change in inflation strategy announced last month.

Amid other factors, rising global cases have unnerved market players but this has been offset by progress on the vaccine front. UK-EU tensions are high over Britain’s proposed internal market bill that gives Britain the power to override parts of Brexit agreement, however, the bill found approval in UK Parliament and passed its first hurdle in the House of Commons, as reported by BBC. Chinese industrial production and retail sales data showed further improvement in the economy, however, this countered with mixed readings from the US and Europe.