Gold prices saw a notable decline on Monday, with the price of 24-karat gold per tola in Pakistan dropping by Rs.1,300, settling at Rs.277,500. This marks a drop from the previous day’s Rs.278,800, according to the All Sindh Sarafa Jewellers Association. Similarly, the price of 10 grams of 24-karat gold decreased by Rs.1,115 to Rs.237,911, while 22-karat gold slid to Rs.218,085 from Rs.219,107.
The drop in domestic gold prices aligns with the international market trend, where gold fell by $13 to $2,670 per ounce from $2,683. This decline reflects the impact of the strong US dollar (USD) and anticipation surrounding the US Federal Reserve’s future policies.
International Gold Market Under Pressure from Strong USD
The global gold price (XAU/USD) has been facing selling pressure, a trend largely attributed to the bullish sentiment surrounding the USD. The USD’s rally, fueled by optimism around President-elect Donald Trump’s expected expansionary economic policies, has kept the dollar close to its four-month high. This upward momentum for the dollar is acting as a headwind for gold, traditionally seen as a safe-haven asset during times of economic uncertainty.
President-elect Trump’s announcement of a 10% tariff on all US imports has sparked speculation about inflation spikes, which could restrict the Fed’s ability to make aggressive rate cuts. This anticipation has elevated US Treasury bond yields, pulling investors away from non-yielding assets like gold.
Fed Policies and Market Sentiment Impact Gold Demand
Recent signals from the US Federal Reserve further weigh on gold prices. The Fed lowered its benchmark rate by 25 basis points last week and indicated potential future rate cuts. Despite this dovish stance, investors remain cautious, with traders factoring in a 65% chance of another rate cut in December. Minneapolis Fed President Neel Kashkari recently commented that the Fed would require clearer signs of a sustained return to the 2% inflation target before making additional cuts.
Trump’s proposed trade policies could intensify global trade tensions, which might limit the downside for gold as investors seek safe-haven assets in response to potential trade constraints and inflationary concerns. However, many traders have held back from aggressive trading ahead of the release of key economic indicators, including the US consumer inflation report on Wednesday, followed by the Producer Price Index and Retail Sales figures later in the week.
Technical Outlook and Key Price Levels for Gold
From a technical analysis perspective, gold prices are nearing multi-week lows and testing key support near the 50-day Simple Moving Average (SMA), pegged between $2,647 and $2,746. If gold continues to decline, a further breakdown could trigger additional selling, potentially pushing prices toward October’s swing low in the $2,605-$2,602 range.
On the upside, a recovery above the $2,700 level would face resistance near $2,718, followed by the $2,740-$2,745 range. A solid move beyond this zone could signal a shift in momentum, possibly lifting prices toward $2,758-$2,790.
Outlook for Investors
Gold’s near-term outlook remains mixed, driven by USD strength, bond yields, and Fed policy expectations. For investors, the upcoming economic reports and statements from Fed Chair Jerome Powell may offer clearer insights into the Fed’s trajectory, influencing gold’s appeal as a hedge against inflation.
