Gold prices in Pakistan surged to a new all-time high on Wednesday, with 24-karat gold being sold at Rs277,200 per tola, an increase of Rs2,200 from the previous day. This marks a 26% rise in the precious metal’s price so far this year, spurred by optimism surrounding a potential interest rate cut by the US Federal Reserve.
Global Factors Driving the Surge
Gold prices on the international market are also seeing upward momentum, with XAU/USD trading at $2,675 per ounce, reflecting a three-week high. This upward trend is largely driven by persistent geopolitical risks, including the ongoing Israel-Lebanon conflict, which has dampened investor interest in riskier assets like equities. Additionally, the lack of details surrounding China’s fiscal stimulus plan has contributed to the uncertainty, further fueling demand for safe-haven assets like gold.
The anti-risk sentiment is also causing a decline in US Treasury bond yields, which bolsters the appeal of non-yielding assets like gold. Despite this, the strength of the US dollar, which has reached its highest level in over two months, is tempering the enthusiasm of bullish traders, limiting gold’s gains.
US Economic Outlook and the Federal Reserve
The possibility of further rate cuts by the Federal Reserve has been a key factor in gold’s appeal. Despite declining bond yields, market expectations are for a regular 25 basis points rate cut in November, which should support the US dollar and create mixed outcomes for gold prices.
Weak US manufacturing data has also added to the uncertainty. The New York Federal Reserve’s Empire State Manufacturing Index dropped to -11.9 in October, its weakest reading since May, signaling deteriorating conditions in the sector. Lower oil prices, which have dropped to a two-week low, are expected to ease inflationary pressures and potentially prompt further rate cuts from the Fed.
Comments from Fed officials reflect a cautious stance. San Francisco Fed President Mary Daly stated that significant progress has been made in controlling inflation, with one or two more rate cuts expected this year if economic conditions allow. Meanwhile, Atlanta Fed President Raphael Bostic downplayed the likelihood of a recession, indicating that inflation is on track to return to the Fed’s target of 2%.
Geopolitical Tensions and Gold’s Safe-Haven Appeal
Geopolitical concerns, especially in the Middle East, are providing further support for gold. Israeli Prime Minister Benjamin Netanyahu recently rejected a ceasefire with Lebanon, while Hezbollah threatened to escalate its attacks. These developments, along with the Biden administration’s pressure on Israel to allow more humanitarian aid into Gaza, have heightened fears of a broader conflict, driving investors toward safer assets like gold.
Technical Analysis and Future Outlook
From a technical perspective, gold bulls remain optimistic. Any further rise in gold prices will likely encounter resistance around $2,685 to $2,686 per ounce, the peak reached in September. If gold manages to break past the $2,700 mark, it could trigger further gains and extend the long-standing upward trend.
However, immediate support for the precious metal is seen around the $2,650 level. A decline below this could lead to further drops toward the $2,632 to $2,630 region. Any significant fall below the $2,600 mark could prompt technical selling and deepen losses.
Domestic Gold and Silver Prices
In Pakistan’s domestic market, the price of 24-karat gold rose to Rs237,654 per 10 grams, reflecting an increase of Rs1,886. The price of 22-karat gold also increased to Rs217,850 per 10 grams.
While gold continues its upward march, silver prices remained unchanged in the local market. The price of 24-karat silver stood at Rs3,050 per tola and Rs2,615 per 10 grams.
Conclusion
With gold prices hitting record highs both in Pakistan and globally, investors continue to seek the precious metal as a safe-haven asset amid economic uncertainty, geopolitical risks, and fluctuating US interest rates. As global markets face volatility, gold remains a crucial hedge for those looking to protect their wealth.
