Gold prices (XAU/USD) continued to attract buyers for the sixth consecutive day on Tuesday, remaining within striking distance of the all-time peak in the $2,265-$2,266 range reached the previous day. The sustained interest in gold comes amidst various market dynamics, including upbeat US manufacturing data released on Monday, which raised doubts over the Federal Reserve’s potential interest rate cuts this year.

The uncertainty surrounding the Fed’s monetary policy, coupled with concerns about potential escalation of geopolitical tensions in the Middle East, has tempered investors’ appetite for riskier assets. This environment acts as a tailwind for gold, a traditional safe-haven investment.

Market sentiment indicates that investors are now pricing in a total of 69 basis points (bps) rate cut for 2024, slightly lower than the Fed’s projected 75 bps. This has contributed to elevated US Treasury bond yields and bolstered the US Dollar (USD) to its highest level since February 14. However, the strength of the USD may cap gains for gold, which does not yield interest.

Analysts suggest that while the bullish trend remains intact, caution is warranted due to overbought conditions indicated by the Relative Strength Index (RSI) on the daily chart. Investors may opt to wait for some near-term consolidation or a modest pullback before considering further positions.

TECHNICAL ANALYSIS

From a technical standpoint, significant support is expected near the $2,223 region, or the previous record high, which should help limit downside risks near the $2,200 mark. However, a convincing break below $2,200 could trigger technical selling and lead to deeper losses.

Conversely, the $2,265-$2,266 region, representing the all-time peak, now acts as an immediate hurdle for gold prices. Sustained strength beyond this level could propel XAU/USD towards the $2,300 round-figure mark.

Investors are closely monitoring US macroeconomic data and speeches by influential Federal Open Market Committee (FOMC) members later during the North American session for further cues on gold’s trajectory.

PAKISTAN

The momentum in the domestic bullion market took a breather on Tuesday as the price of 24-karat gold saw a decline of Rs500 per tola, settling at Rs237,100. This downward shift comes after a significant gain of Rs19,100 recorded in March, aligning with the surge in international gold prices.

According to the Karachi Sarafa Association, the price of 24-karat gold stood at Rs203,275 per 10-gram, marking a decrease of Rs429 compared to the previous session. Similarly, the price of 22-karat gold was quoted lower at Rs186,335 per 10-gram.

Meanwhile, silver prices remained steady, with 24-karat silver maintaining its price at Rs2,600 per tola and Rs2,211.93 per 10-gram.

GLOBAL TRENDS

On the global front, international spot gold continued its upward trajectory, reaching new peaks amidst cooled US inflation data. Bullion surged to $2,261.03 an ounce on Tuesday, marking a 0.42% increase from the previous close.

The US core personal consumption expenditures (PCE) index showed signs of moderation in February, recording a 0.3% month-on-month increase and a 2.8% year-on-year rise. Federal Reserve Chair Jerome Powell, in a statement reported by Reuters, indicated that the latest US inflation data did not undermine the central bank’s baseline outlook. Powell emphasized that despite the strong economic footing, there was no urgency for a rate cut.

“Traders will be closely monitoring Friday’s US nonfarm payrolls release, as another strong jobs report could potentially serve as a catalyst for a pullback in gold prices,” remarked an analyst, highlighting the market’s anticipation for upcoming economic indicators.

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