The price of gold in Pakistan and globally continued its upward trajectory on Friday as geopolitical tensions and macroeconomic factors drove increased demand for safe-haven assets.
Gold Price Movement in Pakistan
In the local market, gold prices surged for the second consecutive day:
- 24-karat gold: Increased by Rs. 2,500 per tola, reaching Rs. 280,500 from Rs. 278,000.
- 10-gram gold (24 karat): Rose by Rs. 2,143, priced at Rs. 240,483, up from Rs. 238,340.
- 22-karat gold (10 grams): Increased to Rs. 220,443 from Rs. 218,479.
- Silver prices: Remained steady at Rs. 3,450 per tola and Rs. 2,957 per 10 grams.
Global Gold Prices
Gold prices in the international market rose by $25 per ounce, climbing to $2,693 from $2,668. During the European session, gold (XAU/USD) briefly rallied above $2,700 for the first time in weeks, bolstered by escalating geopolitical tensions and strong haven demand.
Key Drivers of Gold’s Rally
1. Escalating Geopolitical Tensions
Gold’s rally was fueled by heightened tensions in the Russia-Ukraine conflict:
- The Russian Ambassador to the UK declared the UK a legitimate target for missile strikes, citing Ukraine’s use of British-made Storm Shadow missiles.
- This follows Russia’s ballistic missile strike on Dnipro, a retaliatory move against Ukrainian attacks in the Kursk region.
- Escalating rhetoric and military actions have renewed fears of broader conflict, driving safe-haven flows into gold.
2. US Dollar Strength
The US Dollar (USD) gained ground on Friday, supported by:
- Stronger-than-expected economic data, including lower initial jobless claims at 213,000, compared to 220,000expected.
- Expectations of higher-for-longer interest rates by the Federal Reserve, reducing the urgency for rate cuts.
While a stronger USD typically pressures gold, the metal’s upward momentum remains resilient due to geopolitical factors.
3. Competing Investment Options
Gold is facing competition from Bitcoin (BTC), which is nearing the $100,000 mark.
- Inflows into Bitcoin Exchange Traded Funds (ETFs) have coincided with outflows from Gold ETFs, suggesting some investors are shifting from gold to Bitcoin for better returns.
Technical Analysis: Bullish Momentum for Gold (XAU/USD)
Gold’s price action continues to signal strength in the short-term:
- Three White Soldiers Candlestick Pattern: Gold has formed a bullish continuation pattern, suggesting further upward movement.
- Resistance Levels:
- First major resistance at $2,710 (November 8 swing high).
- A break above this level could confirm a medium-term bullish trend, paving the way for further gains.
- Support Levels:
- Key support remains at $2,686, with stronger support around $2,668.
Indicators
- The Moving Average Convergence Divergence (MACD) indicator suggests bullish momentum, but confirmation depends on sustained crossover by the day’s close.
Outlook for Gold
Gold prices are expected to remain elevated in the short term, supported by:
- Rising Geopolitical Risks: Continued tensions in Eastern Europe are likely to drive haven demand.
- Macroeconomic Uncertainty: A hawkish Federal Reserve and global inflation concerns will keep investors cautious.
However, downside risks include:
- A strengthening US Dollar that could cap gains.
- Increased competition from Bitcoin and other alternative assets.
If gold breaks the $2,710 level, it could signal a shift to a broader bullish trend, potentially targeting the $2,750-2,800 range in the medium term. Conversely, a failure to hold above key support levels may expose prices to a pullback.
Conclusion
Gold continues to shine as a reliable safe-haven asset amid growing geopolitical uncertainty and mixed economic signals. While competition from the USD and Bitcoin presents challenges, gold’s intrinsic value as a hedge against instability ensures it remains a critical part of diversified investment portfolios.
