KARACHI: The price of per tola 24 karat gold in Pakistan decreased by Rs.200 on Monday, trading at Rs.214,500 compared to its previous sale price of Rs.241,700 on the last trading day, according to the All Sindh Sarafa Jewellers Association.

GOLD PER TOLA RATE IN PREVIOUS SESSION

Similarly, the rates of 10 grams of 24 karat gold went down by Rs.172, now priced at Rs.207,047 from Rs.207,219. The price of 10 grams of 22 karat gold also decreased, standing at Rs.189,793, down from Rs.189,950.

The prices of per tola and ten grams of silver remained unchanged at Rs.2,850 and Rs.2,443.41, respectively.

In the international market, the price of gold decreased by $2, now trading at $2,324 compared to $2,326 previously, the Association reported.

GOLD (XAU/USD) EDGES LOWER TO CHART SUPPORT AMID FED UNCERTAINTY

Gold (XAU/USD) edged lower on Monday, reaching chart support as it continues to trade within the range it has maintained since peaking at its all-time high of $2,450 on May 20. Uncertainty over the timing of US Federal Reserve (Fed) interest rate cuts has kept investors guessing and limited the precious metal’s directional movement. Fed officials have been reluctant to commit to a specific date for the first rate cut, pending more conclusive data showing a sustainable decline in inflation.

GOLD’S SENSITIVITY TO INTEREST RATES

Gold, a non-interest-paying asset, is sensitive to interest rates due to the opportunity cost of holding it. Lower interest rates tend to boost demand for gold, as the opportunity cost of holding the metal decreases compared to interest-bearing assets.

GOLD STUCK IN HOLDING PATTERN AS FED AWAITS MORE EVIDENCE

 

Gold is in a sideways consolidation as traders await clearer signals from the Fed regarding its policy intentions. Although the Fed’s preferred inflation gauge, the US Personal Consumption Expenditures (PCE) Price Index, fell in line with expectations to 2.6% year-over-year (YoY) in May, closer to the Fed’s 2.0% target, Fed officials remained cautious about committing to rate cuts. Richmond Fed President Thomas Barkin noted on Friday that there are “lags” in monetary tightening, with services and shelter price-setters still having room to push prices higher. Similarly, San Francisco Fed President Mary Daly told CNBC that while cooling inflation indicates monetary policy is working, it is too early to determine when it will be appropriate to cut rates.

Friday’s inflation data also showed a decline in core PCE to 2.6% YoY from 2.8% previously, and 0.1% MoM from 0.3%. Market-based bets on when the Fed might cut interest rates continue to highlight the September meeting as a possible first cut date. According to the CME FedWatch tool, the probability of a rate cut in or before September stands at 63%, down slightly from 64% on Friday.

GOLD IN A WIN-WIN SITUATION – ZAYE CAPITAL MARKETS

 

Naeem Aslam, Chief Investment Officer at Zaye Capital Markets, believes gold is in a win-win scenario and expects the metal to appreciate eventually. Regardless of whether the Fed signals a rate cut, Aslam told Kitco that the outcome is likely to be positive for gold. Maintaining high interest rates could benefit gold in the long run by weighing on sentiment and the property market, increasing demand for gold as a safe haven.

“Inflation is as low as it can be given the circumstances, and the Fed needs to move away from its current stance and start signaling to the market that a rate cut is coming. If they don’t, market sentiment could worsen — evidenced by pending home sales data and default levels in the commercial market. In the absence of assurance, risk could increase, favoring the price of gold,” Aslam said. Conversely, if the Fed signals a rate cut, gold prices would likely rise due to the weakness in the dollar index.

TECHNICAL ANALYSIS: GOLD CONSOLIDATES ABOVE BROKEN TRENDLINE, INVALIDATING H&S

Gold has pulled back to find support at the downsloping trendline it broke above last week, which connects the “Head” and “Right Shoulder” of the now invalidated Head and Shoulders (H&S) pattern that formed during April, May, and June.

ALI

ALI

Experienced Senior Research Analyst

SIKANDER RAZA

SIKANDER RAZA

Sikander Raza, a Senior Technical Analyst

HAMZA SALEEM

HAMZA SALEEM

Hamza Saleem, a Senior Business Analyst

IRSA

IRSA

Irsa Sajjad, as a Research Analyst for Equities

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