The allure of gold has once again captured the market’s attention, with notable upticks in its value both domestically within Pakistan and on the international stage. This resurgence is underpinned by a variety of economic factors, from currency fluctuations to inflation data, painting a complex but fascinating picture of the precious metals market.
GOLD’S GLITTERING GAIN:
In recent trading sessions, the bullion market has witnessed a significant rally. The price of 24-karat gold in Pakistan soared by 1,100 rupees to a commanding 214,300 rupees per tola, mirroring a global trend where gold continues to strengthen against the backdrop of economic uncertainty. This rise is a continuation of the momentum seen in previous weeks, highlighting gold’s enduring appeal as a safe-haven asset.
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THE ALLURE OF 22-KARAT:
Not to be overlooked, 22-karat gold has also seen its value increase, reaching 168,417 rupees for a 10-gram piece. This uptick reflects the market’s overall buoyancy, offering investors and enthusiasts alike a cause for optimism.
SILVER’S STEADY SHINE:
Contrasting gold’s dynamic fluctuations, silver prices have showcased remarkable stability. This steadiness provides a tranquil counterpoint in the volatile realm of precious metals, with 24-karat silver per tola remaining at 2,580 rupees.
GLOBAL GOLD DYNAMICS:
XAUUSD posted an intraday high of $2023.01 and intraday low of $2015.52. Gold is currently trading at $2015.52 (8:53pm Friday, 19 February 2024 (GMT+5) Time in Pakistan). A day earlier gold was trading at $2005.94 (6:16pm Friday, 16 February 2024 (GMT+5) Time in Pakistan).
Internationally, gold prices have ascended for the third consecutive session, now trading impressively at $2,021.8. This climb is particularly notable following a period of volatility exacerbated by hotter-than-expected US inflation data, which had momentarily pushed gold below the $2,000 mark.
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THE CURRENCY CONUNDRUM:
The Pakistani Rupee’s slight depreciation against the US dollar has had pronounced implications for domestic gold prices. As gold is primarily denominated in US dollars, any fluctuation in the PKR directly impacts its local cost, underscoring the intricate relationship between currency movements and gold pricing.
MARKET MOVEMENTS AND MONETARY POLICIES:
Despite expectations to the contrary, gold prices have surged even in the face of persistent core inflation indicators, challenging the Federal Reserve’s (Fed) monetary stance. Investors’ anticipation of rate cuts has been tempered by sticky Consumer Price Index (CPI) and Producer Price Index (PPI) data, suggesting a more cautious approach to monetary easing.
THE FED’S OUTLOOK:
Recent remarks from Federal Reserve officials hint at potential rate cuts in the upcoming summer, contingent upon favorable inflation trends. This prospective easing of monetary policy could reduce the opportunity cost of holding non-yielding assets like gold, further invigorating the market.
TECHNICAL ANALYSIS AND FUTURE OUTLOOK:
Gold’s recovery, marked by its return to near the 20-day Exponential Moving Average (EMA) around $2,022, signals a bullish outlook if sustained. However, a downward-sloping trendline from late December poses resistance, with the Relative Strength Index (RSI) indicating a sideways market trend.
