NEW DELHI : Gold is likely to maintain its positive momentum on a weaker dollar and fading expectations of a near-term US rate hike, while crude oil is expected to remain cautiously bullish amid heightened geopolitical risks, with strong Gulf exports and weak demand likely to limit gains in Brent prices, pulling prices to USD 80/bbl, according to a Kotak Neo report.

Spot gold extended its two-week rally, rising 0.5 per cent intraday before paring gains to around USD 4,400 an ounce, following a nearly 1 per cent gain last week. Silver, on the other hand, outperformed, climbing 1.6 per cent to USD 65.73 an ounce.

“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,” Kotak noted.

The dollar declined 0.2 per cent, while a steeper Treasury yield curve fueled expectations that the Fed is unlikely to adopt an aggressively hawkish stance in the near term.

Also, gold prices edged higher in early Asian trade on Wednesday, supported by softer US Treasury yields that boosted demand for the precious metal. The yellow metal was trading at around USD 4,355.76 at the time of reporting.

Geopolitical tensions, including renewed Strait of Hormuz attacks and possible US measures against Iran, continued to support bullion, while steady oil flows, Iran-Oman talks and strong central-bank buying, particularly from China, provided further support, Kotak noted.

Overall, for gold, “Bias remains positive, but gains require a sustained break above USD 4,400; renewed energy inflation or higher yields could trigger consolidation,” the report noted.

On the other hand, benchmark crude oil prices remain moderately positive, as “The market is balancing escalating geopolitical risks against continued physical supply flows and concerns over demand,” noted Kotak.

Fighting in Lebanon and renewed tanker attacks in the Strait of Hormuz have complicated prospects for a US-Iran settlement, raising the risk of further supply disruptions. At the same time, Asian refiners –including Indian buyers — are securing crude cargoes further in advance to safeguard supplies.

Additionally, Russia’s refinery disruptions and fuel shortages are adding another layer of supply-side risk. However, Gulf producers are reportedly maintaining crude flows above 4 million barrels a day, limiting the immediate impact of the disruptions.

“Weak demand and ample availability remain key bearish forces,” as per Kotak. It noted, while “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.”

At the time of reporting, Brent crude was trading at around USD 91.78 per barrel while crude oil was trading at around USD 85.52 per barrel.