Gold prices may test $2,020: Emkay Global

Chennai : Gold prices may test $2,020 ounce and break through owing to weak dollar and uncertainties, said Emkay Global Financial Services.

A higher probability is for gold to test the $2,100 level again and break through the same, Emkay Global added.

“The only factor that may dilute this move (touching $2,100) would be a strong Dollar on the Dollar Index, and a more prolonged interest rate up-cycle. It is a bit too early to make any safe conclusions on this as geo-political conditions are not settled as yet, and market volatility is still rising,” Emkay Global said.

The levels $1,930 and $1,960 are strong support levels for gold currently.

According to Emkay Global, the Dollar Index is within a narrow range at present and is lending some support to gold.

There is a feeling among some of the US Federal Reserve officials that the stress in the banking system will only accelerate the arrival of the recessionary conditions earlier than expected.

This will also keep gold fairly well supported. It may be stated that gold still retains its safe haven status and the recent events have had a positive impact due to this, Emkay Global said.

Gold is currently trading in the range of $1,960-2,060/oz. It made two attempts in the last one month to break through the $2,060 level. 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.

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, said Emkay Global.