In a notable resurgence, gold prices in Pakistan surged on Wednesday, with 24-karat gold leaping by Rs2,900 to reach Rs244,100 per tola. However, what catches attention is that this price is deliberately maintained Rs3,000 below its true value today.
Explaining this move, the association stated, “In light of the significant decrease in purchasing power, the current gold price has been intentionally set Rs3,000 lower than its actual cost.”
This adjustment comes in the wake of last week’s substantial increase when 24-karat gold saw a rise of Rs5,500 per tola.
According to the Karachi Sarafa Association, the price of 24-karat gold stands at Rs209,191 per 10 grams, marking an increase of Rs2,487. Similarly, the price of 22-karat gold climbed to Rs191,758 per 10 grams.
In contrast, silver prices remained steady in the domestic market, with 24-karat silver holding firm at Rs2,650 per tola and Rs2,271.94 per 10 grams.
Meanwhile, on the global scale, international spot gold traded near $2,369.18 an ounce, reflecting a 0.47% increase for the day.
XAU/USD TECHNICAL ANALYSIS: BULLS MAINTAIN CONTROL, POTENTIAL RALLY AHEAD
The XAU/USD pair is currently showing signs of bullish control on the daily chart, although the prospects of a stronger rally remain uncertain. Technical indicators are advancing within positive levels, albeit with varying strength. However, they have reached fresh multi-week highs, indicating a potential for bullish continuation.
Notably, XAU/USD recently surpassed a flat 20 Simple Moving Average (SMA), which had previously offered near-term support around $2,335 earlier in the week. Additionally, the 100 and 200 SMAs are showing accelerated advances well below the current level, signaling renewed buying interest in the market.
In the short term, the picture remains bullish. Technical indicators on the 4-hour chart are firmly southbound, with the Relative Strength Index (RSI) entering overbought territory without any signs of retreat. Moreover, the pair experienced a significant rebound from a bullish 20 SMA, which has gained upward traction above the also bullish 100 and 200 SMAs.
Despite prevailing signs of risk appetite, XAU/USD could potentially target the $2,400 mark in the upcoming trading sessions.
Key Support Levels:
- 2,378.10
- 2,361.35
- 2,345.20
Key Resistance Levels:
- 2,392.50
- 2,403.10
- 2,417.60
FUNDAMENTAL OVERVIEW: GOLD PRICES SURGE TO THREE-WEEK HIGH AMID STUBBORN INFLATION
Gold prices surged to a fresh three-week high, breaching the $2,380.00 mark on Wednesday, maintaining a bullish stance during the mid-American session. The rally in XAU/USD followed the release of the United States Consumer Price Index (CPI), revealing persistently high inflation levels in April, according to data from the US Bureau of Labor Statistics (BLS).
In April, the CPI rose by 3.4% year-over-year, slightly lower than the 3.5% recorded in March but in line with market expectations. The core annual reading, excluding volatile food and energy prices, eased to 3.6% from the previous 3.8%, also meeting market forecasts. Additionally, the monthly CPI edged up by 0.3%, falling slightly short of the expected 0.4%.
While the figures weren’t as dire as feared, they were sufficient to reaffirm the Federal Reserve’s (Fed) hawkish stance. Despite expectations for potential rate hikes in December, the Fed has maintained its policy rate range of 5.25% – 5.50% since July 2023. However, with inflation persisting above the central bank’s target and the labor market remaining tight, Fed Chairman Jerome Powell adopted a distinctly hawkish tone, signaling a shift in policy.
Investors, in response, are now anticipating softening inflation figures, contrary to the trends seen in the first quarter of the year. This anticipation has led to a drop in the value of the US Dollar as speculative interest mounts for potential adjustments in monetary policy, including rate cuts.
The market sentiment remains sensitive to any indications of changes in the Fed’s stance, with gold prices likely to continue reacting to economic data releases and central bank communications in the coming sessions.
