KUALA LUMPUR (April 18): Gold prices may correct amid potential delay in the anticipated rate cuts by the US Federal Reserve, Philip Capital warned on Thursday and advised investors to stop buying Malaysia’s sole gold exchange-traded fund (ETF).

Prices of the precious metal will be find within US$2,240-US$2,400 (RM10,629-RM11,389) range after gaining nearly 16% year-to-date, Philip Capital said. The research house flagged that gold prices are now in overbought territory, and downgraded its rating for Tradeplus Shariah Gold Tracker ETF to "hold".

A delay in US rate cut following recent remark by the Federal Reserve chair Jerome Powell may potentially prompt a correction in gold prices, Philip Capital noted.

Gold typically turns cheaper when interest rates rise, pressuring prices and lifting yields of the US Treasury, due to opportunity cost of holding gold.

Prices of gold have risen to an all-time high of US$2,431 earlier this month amid fall in US Treasury yields on the back of rate cut expectations. Further, ongoing geopolitical tensions in the Middle East have also sparked a rally as investors seek refuge in safe haven assets to weather the uncertainty.

However, Fed’s Powell has highlighted that the recent economic data indicated that it may take longer than expected for inflation to reach its 2% inflation goal. The Fed’s rate-setting committee has said that they need to be confident that inflation is slowing sustainably before cutting rates from a 23-year high.

Gold prices may find initial support at US$2,240 followed by US$2,144 amid mixed technical indicators, Philip Capital said.

Nevertheless, “considering the strong run-up in gold price since 2023 and potential push back for rate cuts, we have a neutral outlook for gold,” Philip Capital added.