The prices of gold and silver surged on Wednesday following weak economic data from the US, which fueled expectations of deeper interest rate cuts.
GOLD PRICE JUMPS BY RS2,500 IN PAKISTAN
In Pakistan, the price of 24-karat gold rose by Rs2,500, reaching Rs275,500 per tola, according to the Karachi Sarafa Association. The price of silver also saw an increase, climbing by Rs100 to Rs3,050 per tola.
GLOBAL GOLD HITS RECORD HIGH
Globally, spot gold reached a record high of $2,670 per ounce earlier today before trimming some of its gains. The rise comes after a report on Tuesday revealed that US consumer confidence saw its largest decline in three years, reinforcing expectations of future rate cuts by the Federal Reserve.
10-GRAM GOLD PRICES INCREASE SIGNIFICANTLY
The price of 24-karat gold per 10-gram in Pakistan also rose to Rs236,197, up by Rs2,144. Meanwhile, 22-karat gold was quoted at Rs216,514 per 10-gram, continuing its upward trend.
GOLD RALLIES TO RECORD HIGH ON WEAK US CONSUMER CONFIDENCE DATA
Gold (XAU/USD) surged to a record high of $2,670 per troy ounce on Wednesday, after an unexpected decline in US consumer confidence increased expectations for deeper interest rate cuts from the Federal Reserve (Fed). Lower interest rates are beneficial for gold, as they reduce the opportunity cost of holding the non-yielding asset, making it more attractive to investors.
CHINA’S STIMULUS AND MIDDLE EAST TENSIONS DRIVE GOLD HIGHER
The People’s Bank of China’s aggressive stimulus package, which includes substantial cuts to borrowing costs, supported the rise in gold prices. Additionally, escalating tensions in the Middle East, particularly Israel’s bombing of Hezbollah targets in Lebanon, have pushed investors toward gold as a safe-haven asset.
GOLD REACHES NEW PEAK AS FEDERAL RESERVE MAY CUT RATES FURTHER
The Conference Board Consumer Confidence Index dropped to 98.7 in September, significantly below the expected 103.9. This fueled speculation that the Fed may implement more aggressive rate cuts, with market-based probabilities of a 50 basis points cut rising to 60%, according to the CME FedWatch tool.
FED GOVERNOR’S COMMENTS TEMPER RATE CUT EXPECTATIONS
Federal Reserve Governor Michelle Bowman’s remarks on Tuesday provided some relief, as she suggested that starting the rate-cutting cycle with a 0.25% reduction might be more appropriate given the current economic strength. Her comments registered a 7.0 on FXStreet’s FedTracker, which rates Fed officials’ speeches on a dovish-to-hawkish scale.
TECHNICAL ANALYSIS: GOLD EXTENDS STRONG UPTREND
Gold continues its strong uptrend, breaking new highs. According to technical analysis principles, the dominant short, medium, and long-term trends favor further upside. Key resistance levels are at $2,700 and $2,750, with confirmation coming from a break above the $2,670 peak.
However, the Relative Strength Index (RSI) shows gold is in overbought territory. Traders are advised to avoid adding to their long positions and should consider closing longs if gold exits overbought levels, which may indicate a deeper correction.
