Gold's 15% Monthly Rally Has More Room To Run, Says Kotak Neo's Sunil Katke

Gold has staged a sharp turnaround, rallying 15% in a single month in its strongest run in more than four months, reviving talk of whether the metal can retest the fresh peak of $5,600 per ounce it touched earlier this year. It remains around 16% below that high even after the recent bounce.

The metal surged to a record high in January, climbing past $5,600 per ounce, before slipping to around $4,600 by August. The correction followed renewed Iran-related tensions that pushed oil prices higher and raised concerns over a potential Fed rate hike later this year. Sunil Katke, Head of Commodities at Kotak Neo, said that backdrop has now shifted, with several factors aligning to support gold prices.

The Fed Pivot Angle

Katke pointed to the recent slide in crude oil prices as the starting point for gold's turnaround. "Falling crude oil prices reduce inflationary concerns, thereby pushing the Fed towards a more dovish stance, meaning no further rate hikes, rather a possibility of rate cuts if not this year, then at least from next year onwards," he said. "This reduces US bond yields, which is positive for gold and silver."

That view lines up with market pricing. Traders are currently building in a 61% chance that the Fed holds rates steady next month, against a 42% probability of a hike, according to the CME FedWatch Tool. Gold typically acts as an inflation hedge, though higher rates tend to dull its appeal since the metal carries no yield of its own.

Dollar Weakness And ETF Demand

Katke also flagged currency and flow-based support building alongside the rate story. "A weakening US dollar is adding to the momentum," he said, pointing also to "decent buying in bullion ETFs" as a factor reinforcing the move. World Gold Council data backs this up, showing around 23 tonnes added to global ETF holdings recently, with the pace picking up to 45 tonnes added month-to-date in August.

The dollar itself has been on the back foot, aided by the US Treasury's move to double the size of its buybacks of longer-dated Treasury securities to at least $4 billion per operation over the coming quarter, a step Treasury Secretary Scott Bessent has signalled could be expanded further. The move is aimed at keeping longer-term yields contained, which supports gold by lowering the opportunity cost of holding a non-yielding asset, while any resulting dollar weakness makes the metal cheaper for buyers holding other currencies.

China Buying And The Yen Carry Trade

On the demand side, Katke highlighted a specific regional driver. "Increasing Chinese gold buying" is among the factors he sees supporting prices, alongside a longer-horizon structural theme tied to Japan. "Japan's yen carry trade unwinding will support gold prices in the longer run," he said.

Central Banks Still Buying

Central bank demand remains, in Katke's view, one of the strongest pillars under the market. "Central banks continue to buy gold, close to 20% of global supply," he said. That aligns with World Gold Council figures showing central banks purchased 288.9 tonnes of gold in the second quarter, up 62% from a year earlier, with South Korea returning to the gold market after a 13-year gap. The council's Central Bank Gold Reserves Survey found 89% of respondents expect global reserves to rise over the next year, while a record 45% expect to add to their own holdings in the same period.

US Debt And Equity Market Jitters

Katke also linked gold's appeal to concerns beyond the immediate rate cycle. "Rising concerns over US debt crossing the $40 trillion mark" are weighing on sentiment, he said, while "choppy equity markets" are pushing investors to lean on gold as a diversification tool at a time when broader risk assets look less certain.

Silver's Deficit Story

Katke was equally constructive on silver, tying its outlook to a persistent supply gap. "Silver continues to be in deficit for the sixth consecutive year," he said, adding that demand from "green energy, EV, and electronics" is expected to keep supporting silver prices going forward.

A softer US dollar, headed for a weekly decline, has made dollar-priced commodities including gold and silver more affordable for holders of other currencies, adding another layer of support to the rally even as markets weigh how much further it can run.

Key Price Levels To Watch

With the broader trend firmly in gold and silver's favour, Kotak Neo Research's daily technical levels for August 26 offer a near-term map for traders navigating the rally. Spot gold, quoted at Rs 4,643, has support at Rs 4,607, Rs 4,586 and Rs 4,515, with resistance at Rs 4,678, Rs 4,700 and Rs 4,771, placing the buying zone at Rs 4,586 and the selling zone at Rs 4,700. MCX Gold October contracts, at Rs 162,926, carry a buying zone of Rs 161,531 and a selling zone of Rs 164,321, with a stop loss advised below Rs 159,807 for buy positions.

Spot silver, trading at Rs 69.25, has support at Rs 68.30, Rs 67.75 and Rs 65.95, with resistance at Rs 70.15, Rs 70.70 and Rs 72.55, marking its buying zone at Rs 67.75 and selling zone at Rs 70.70. MCX Silver September contracts, at Rs 245,475, show a similar range, with a buying zone of Rs 242,287 and a selling zone of Rs 248,663, according to the report

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