In recent trading sessions, the domestic bullion market has shown signs of stability, with the price of 24-karat gold experiencing a modest increase. On Thursday, the price per tola (a traditional South Asian unit of mass) rose to Rs228,550, marking a Rs250 gain from the previous day. This uptick is part of a trend that keeps gold prices near historical highs, fueled by a mix of international demand, monetary policy expectations, and global uncertainties.

GOLD PRICE MOVEMENTS

The Karachi Sarafa Association noted that the price for a 10-gram piece of 24-karat gold climbed to Rs195,945, up by Rs215. Even 22-karat gold, slightly less pure, saw its price nudge upwards to Rs179,616 for 10 grams. Meanwhile, silver prices held steady, with 24-karat silver selling at Rs2,600 per tola and Rs2,229.08 for 10 grams.

Globally, gold continued to dazzle, trading close to $2,169 an ounce after a notable increase the previous day. Experts from financial giants like JPMorgan Chase & Co. have pegged gold as a top commodity pick, predicting its price might soar to $2,500 an ounce within the year.

XAUUSD posted an intraday high of $2177.06 and intraday low of $2167.51. Gold is currently trading at $2169.65 (1:36pm Thursday, 14 March 2024 (GMT+5) Time in Pakistan). A day earlier!

XAUUSD_2024-03-14_13-35-57

WHAT’S DRIVING GOLD PRICES?

Several factors contribute to the current vibrancy in gold prices. Expectations of interest rate cuts in the United States, robust buying activity in China, and ongoing geopolitical tensions are primary drivers. Despite recent data hinting at persistent inflation, traders still largely anticipate a rate reduction by the U.S. Federal Reserve, with a 67% probability of a cut by June.

Upcoming events, such as the Fed’s policy meeting and its ‘dot plot’ projections, could further influence market movements. Additionally, developments in China’s housing market and shifts in consumer demand are closely watched for their potential impact on gold prices.

THE IMPACT OF GLOBAL EVENTS ON GOLD

The geopolitical landscape, marked by the ongoing Russia-Ukraine conflict and tensions in the Middle East, also plays a significant role in shaping gold prices. Such uncertainties typically enhance gold’s appeal as a safe-haven asset. Moreover, the market is on edge as it awaits the outcome of the Federal Open Market Committee (FOMC) meeting, with investors keen on gauging the Fed’s stance on interest rates.

TECHNICAL OUTLOOK

From a technical standpoint, gold shows resilience, finding solid support near the $2,150 level. Any upward movement might encounter resistance around $2,195, with potential breakouts leading to new highs. Conversely, a dip below the $2,150-$2,155 support zone could trigger a corrective slide towards lower support levels, testing the market’s strength.

The $2,195 region, which was last Friday’s highest position, is likely to provide resistance for any higher rise. Gold prices may break out of the $2,200 barrier if buying activity persists, indicating a bullish signal and possibly prolonging the notable upswing observed in the past several weeks.

On the other hand, the $2,155-2,150 area seems to protect the short-term decline. The next significant support zone, between $2,128 and $2,127, might be reached by gold prices if they drop below this level. In order to provide XAU/USD with a strong foundation, a subsequent decline may aim for the elusive psychological $2,100 mark. Technical selling might be sparked by a clear decline below this level, which would continue the downward trend.

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