Gold futures expected to trade higher
KUALA LUMPUR: The gold futures contract on Bursa Malaysia Derivatives is expected to trade higher next week, tracking the performance of the US COMEX amid uncertainties surrounding the market.
OCBC Bank Research said in a note that gold’s blistering rally which was up by 11.5 per cent 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 geopolitical hedge characteristic.
“Historical evidence since 2001 showed that gold strengthened when 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 in the belief that the Fed will opt to cut interest rates irregardless 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 told Bernama.
For the week just ended, domestic gold futures traded mostly higher.
Gold futures volume in the local market fell to 198 lots from 55 lots in the previous week, while open interest widened to 75 contracts from 31 contracts a week ago.
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
Contracts for June 2024, August 2024, October 2024 and December 2024 all settled firmer at US$2,318.60 per troy ounce compared to US$2,259.0 per troy ounce a week earlier.
The price of physical gold stood at US$2,293.50 per troy ounce, according to the London Bullion Market Association’s afternoon fix on April 4.