Gold prices shined to a 6-Year high on likely rate cut by the US Federal bank, having strong potential to test $1600/oz this year.

Gold Comex August prices climbed to a 6-Year high of $1442.9 an ounce in June, after breaching a 5-Year long consolidation range of $1150-$1375, mainly on account of likely rate cut by the FOMC to deal with global growth concern as indicated by them in June meeting. Trade spat between US and China and tensions in Middle East also underpinned the sentiment. 

Gold prices ended the June month with a robust over 8% gains and, it was finest June performance we have ever seen in last two decades.

In India, prices in futures touched a 6-Year high of Rs34893/10grams, marginally below from all time of Rs35057/10grams touched in August 2013.

Fed Rate Monitor tool is showing 100% probability of rate cut by the Fed in July 31 meeting. If this happens it will provide longevity in the gold’s up thrust and, prices will explode towards $1500 initially and then $1600 of late this year.

Dollar Index, which remained unchanged YTD 2019 against the gain of 2.75% same period last Year, lost its appeal on global growth concern and rate cut prospect. It lost about 2% in June and likely to remain in the path of weakness ahead, will pave the way for further surge in the gold prices. If Fed goes with July rate cut, we won’t be surprised if it falls to 92.

What if US-China Trade war ends?

We see only short-term profit booking case if US-China trade spat ends. $1350-$1375 is likely to provide supports during the spell of corrections now. For some time now, prices will remain in $1380-$1443 band. On break of $1443, prices will accelerate gaining momentum for $1500 and then $1600 per once.

Recently, the U.S. Federal Reserve indicated that it’s preparing to cut interest rates despite a strong U.S. jobs report released last week. US Fed chairman Jerome Powell said overnight that the central bank “will act as appropriate” to counter slowing business investments and growing economic uncertainties.

What if US-China Trade war ends?

We see only short-term profit booking case if US-China trade spat ends. $1350-$1375 is likely to provide supports during the spell of corrections now. For some time now, prices will remain in $1380-$1443 band. On break of $1443, prices will accelerate gaining momentum for $1500 and then $1600 per once. Uncertainties surrounding Sino-U.S. trade war and Brexit were also cited as supporting the safe-haven metal.