GOLD PER TOLA RATE IN PAKISTAN: Gold prices in Pakistan surged on Friday, with 24-karat gold reaching a new all-time high of Rs265,900 per tola, marking an increase of Rs2,900. The Karachi Sarafa Association also reported a jump in 24-karat gold prices to Rs227,966 per 10-gram, up Rs2,486. Similarly, 22-karat gold rose to Rs208,970 per 10-gram.
SILVER PRICES FOLLOW SUIT
In line with the rise in gold prices, silver also saw a significant increase. The price of 24-karat silver climbed to Rs2,950 per tola, an increase of Rs50, while silver per 10-gram was priced at Rs2,529, up Rs43.
GLOBAL MARKETS FUEL THE RISE IN GOLD
On the international front, spot gold traded near $2,570 an ounce, reflecting an increase of $11.7 (0.46%) from the previous session. The rise in global gold prices is driven by heightened expectations that the Federal Reserve will reduce interest rates next week, following data indicating a slowdown in the U.S. economy.
KEY DRIVERS BEHIND GOLD’S ASCENT
The ongoing rally in gold is linked to various factors. A major catalyst has been the growing speculation that the Federal Reserve will take a dovish stance and cut rates to combat slowing economic growth. This sentiment is bolstering gold’s appeal as a safe-haven asset. Furthermore, inflationary concerns and global uncertainties continue to push investors toward precious metals, which are seen as a reliable store of value.
Gold (XAU/USD) surged higher on Friday, trading around $2,560, up 0.40% for the day after hitting new record highs on Thursday. The breakout from its recent sideways range, where it had oscillated since August 20, was triggered by US Producer Price Index (PPI) data, showing a mixed inflation outlook. Despite sticky core PPI, the market viewed the overall data as disinflationary, fueling the rally in gold prices.
FED RATE CUT DEBATE REIGNITES GOLD’S MOMENTUM
The ongoing rally has been further bolstered by renewed speculation over whether the Federal Reserve will cut interest rates by 0.50% or 0.25% in its upcoming meeting. After the release of core Consumer Price Index (CPI) data, expectations had settled on a smaller 0.25% cut. However, a report from The Wall Street Journal and comments from former New York Fed President William Dudley revived the possibility of a 50 basis point (bps) cut. This led to a sell-off in the US Dollar (USD) and lower US Treasury yields, driving more investors into gold.
TECHNICAL ANALYSIS: GOLD TARGETS NEW HIGHS
Gold has decisively broken out of its multi-week range, surpassing the previous high of $2,531. The precious metal reached its short-term target of $2,550, set after the breakout from its July-August consolidation. The next target is now projected around $2,590, though technical indicators suggest caution due to overbought conditions.
RSI OVERBOUGHT: A POTENTIAL PULLBACK AHEAD?
The Relative Strength Index (RSI) for gold indicates an overbought market, signaling that investors should be wary of adding new positions. A correction could take place, with support levels likely to emerge at $2,550 or $2,531. However, the overall trend remains bullish across all timeframes, suggesting that any dip may be short-lived, and the uptrend will eventually resume, potentially driving gold to new record highs.
