The gold price (XAU/USD) experienced a retreat after reaching a fresh record high earlier in the day, hovering just above the $2,200 mark during the first half of the European session. Despite this pullback, gold remains up for the second consecutive day, influenced by various market factors.
In Pakistan, the price of 24-karat gold skyrocketed by Rs4,600 to reach Rs232,400 per tola, according to reports from the Karachi Sarafa Association. Similarly, the price of 24-karat gold per 10-gram surged to Rs199,245, reflecting an increase of Rs3,943. Meanwhile, 22-karat gold also experienced an upward trend, reaching Rs182,642 per 10-gram.
MARKET SENTIMENT AND FACTORS:
The prevailing risk-on sentiment, characterized by a generally positive tone in equity markets, prompted profit-taking in the safe-haven gold. Additionally, a modest uptick in US Treasury bond yields contributed to the downward pressure on the precious metal, especially amidst slightly overbought conditions on short-term charts.
However, the downside for gold appears limited due to the Federal Reserve’s projection for three 25 basis points (bps) interest rate cuts this year. This expectation is anticipated to cap any significant upside for US bond yields and may continue to weigh on the US Dollar (USD), thereby benefiting the non-yielding yellow metal. Consequently, any further decline in gold prices might be viewed as a buying opportunity and is expected to be constrained.
SHORT-TERM OPPORTUNITIES AND DATA WATCH:
Traders are now focusing on upcoming economic data releases, including flash PMIs and US macro data such as Initial Jobless Claims and Existing Home Sales, for short-term trading opportunities amidst evolving market dynamics.
TECHNICAL ANALYSIS
According a technical analysis, the recent positive move confirmed a breakout through a bullish flag chart pattern, affirming the positive outlook for gold prices. However, the Relative Strength Index (RSI) has crossed above the 70 mark, suggesting the need for near-term consolidation or a modest pullback before further positioning for an appreciating move. Nonetheless, the broader technical setup supports the potential for an extension of the strong uptrend witnessed over the past month.
In terms of support levels, a corrective decline below the $2,200-2,190 region is likely to attract fresh buying interest, with limited downside near the $2,160-2,158 horizontal zone. Further support is observed around the weekly swing low near the $2,146 area, followed by the $2,128-2,127 zone. In the event of continued decline, the XAU/USD could find support near the $2,100 round figure.
XAUUSD posted an intraday high of $2222.90 and intraday low of $2186.36. Gold is currently trading at $2204.89 (2:55pm Thursday, 21 March 2024 (GMT+5) Time in Pakistan). A day earlier Gold was trading at $2154.30 (5:28pm Wednesday, 20 March 2024 (GMT+5) Time in Pakistan).
