The firm believes that periods of consolidation often build a launch pad for future gains in the yellow metal. It noted that earlier this year, strong demand from China supported gold prices. However, China’s reported selling between April and May has now faded as a key driver.
A stable US dollar and firmer US bond yields have added pressure on gold recently. Emkay sees technical support for gold at $3,297 and $3,248 an ounce.
The report highlights two main triggers for gold’s next move: US interest rates and the dollar’s direction. Emkay expects the US Federal Reserve to stay on hold for now as it gauges the impact of tariffs on retail prices. Still, the firm sees a high chance of one or two rate cuts before the year ends due to moderating inflation.
A rate cut could weaken the dollar further. The dollar index has already dropped about 10% over six months and since January. While some of this is priced into gold, Emkay says a sustained drop in yields and rates could push the dollar lower and support gold.
However, the firm cautions that fresh US spending of around $4.60 trillion could add new borrowing pressures, which may lift yields and counter any downward pressure on the dollar.
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