KUALA LUMPUR: The gold futures contract on Bursa Malaysia Derivatives is expected to trade higher this week, tracking the performance of the Comex in the United States amid uncertainty surrounding the market.
OCBC Bank Research said in a note that gold’s blistering rally, which has seen the precious metal rise 11.5% year to date as of April 3, may have further room to run in the medium term.
”We maintain a bullish outlook on gold prices on the back of expectations of global easing on interest rates, central banks’ continued purchases of gold as well as gold’s characteristic of being a geopolitical hedge.
“Historical evidence since 2001 showed that gold strengthened when US Federal Reserve (Fed) rate hike cycle ended and continued to extend its bullish run when the Fed rate cut cycle gets underway,” it said.
SPI Asset Management managing director Stephen Innes said geopolitical risk fills the airwaves amid the constant beating of war drums in the Middle East.
He said gold investors are currently operating onthe belief that the Fed will opt to cut interest rates regardless of whether inflation reaches its target or not.
“Furthermore, emerging-market central banks are increasingly bolstering their gold reserves, adding to the demand for the precious metal.
“This trend is particularly notable in locations such as London and Zurich, where gold vaults are seeing increased activity.
“The move is supporting the price of gold in the near term,” he said.
Last week, domestic gold futures traded mostly higher.
On a Friday-to-Friday basis, the April 2024 contract rose to US$2,297.10 per troy ounce from US$2,258.30 per troy ounce and May 2024 increased to US$2,2312.90 per troy ounce from US$2,259.0 per troy ounce last week. — Bernama
