Gold set for positive bias, Brent crude may slide towards $80/bbl: Report

Gold is poised for further gains, driven by a weakening U.S. dollar and diminishing prospects of an imminent interest rate hike by the Federal Reserve, according to a Kotak Neo report. The precious metal has extended its rally, with spot gold showing an upward trend despite some profit-taking.

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The key catalyst was softer U.S. retail sales and weaker consumer sentiment, which pressured the dollar and reduced expectations of a September Fed hike.

The report highlights that softer U.S. retail sales and weaker consumer sentiment have pressured the dollar, leading to reduced expectations of a September Fed rate increase. This environment, coupled with softer U.S. Treasury yields, typically boosts demand for gold, a traditional safe-haven asset. The bias for gold remains positive, though a sustained break above $4,400 per ounce is needed for further momentum. However, renewed energy inflation or rising yields could trigger consolidation.

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Bias remains positive, but gains require a sustained break above USD 4,400; renewed energy inflation or higher yields could trigger consolidation.

Meanwhile, crude oil prices are expected to maintain a cautiously bullish stance. Benchmark crude oil prices remain moderately positive as the market navigates escalating geopolitical risks against steady physical supply flows and persistent demand concerns. Fighting in Lebanon and renewed tanker attacks in the Strait of Hormuz have heightened the risk of supply disruptions, particularly concerning a potential U.S.-Iran settlement.

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The market is balancing escalating geopolitical risks against continued physical supply flows and concerns over demand.

Despite these supply-side risks, including refinery disruptions in Russia, Gulf producers are reportedly maintaining robust crude flows. This, combined with weak global demand and ample availability, is expected to limit significant price increases. The Kotak report suggests that sustained Gulf exports and demand weakness could cap gains, potentially pulling Brent crude prices towards $80 per barrel, even as escalation of geopolitical tensions threatens higher prices.

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Bias remains cautiously bullish, with escalation threatening USD 100/bbl -- sustained Gulf exports and demand weakness could cap gains and eventually pull Brent toward USD 80/bbl.