NEW DELHI: Emkay Wealth Management said in its report that Gold prices have seen support due to the current economic data in the US
The latest data set has led to a belief that the United States Federal Reserve will take a pause and hold interest rates at current levels. The yields on government bonds have also decreased from the high levels recorded in March.
The other Fed officials, quite a few of them, appeared to believe that there is ample capacity for the Fed funds rate to climb even further than the present range of 5% – 6.25%, despite the Fed Chairman's subtle allusion to the prospect of a halt. The US's expanding job market and low unemployment rates point to the economy's underlying resilience. As per reports, the US Fed's future actions will serve as a hint and predict how gold prices will likely fluctuate.
For the Fed, inflationary pressures might still be present. The central bank may halt in its June meeting, according to the general consensus. The central bank may have to raise rates if retail prices increase. According to the research, any rate increase could cause gold prices to decline.
The uncertainty surrounding the global economy's growth prospects was what first supported gold prices. The central banks' strict money policies are anticipated to slow down economic growth in most economies. According to the analysis, a slowdown engulfing the larger economies might highlight gold as a safe haven and as something that holds its worth even in tumultuous times.
Although gold is predicted to keep steady at the support levels, much will depend on how the US economy performs.
The recession may be a touch-and-go situation, and if that turns out to be the case, gold will only be able to make modest gains. Recent US data are still contradictory.
Second, the Fed has not yet issued a formal declaration on the future course of policy rates. Over the course of the following two FOMC sessions, it will continue to develop.
Third, there is now no buoyancy brought on by capital coming into ETFs. Finally, the research noted that given the estimate that circumstances will remain the same across territories, there will be limited diversification in the current investment portfolios and that a diversification away from the US or developed markets is not currently practicable.
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