The price of 24 karat gold per tola experienced a notable surge, climbing by Rs.1,200 to reach Rs.229,400 on Tuesday. This increase marked a significant jump from its previous closing rate of Rs.228,200. Similarly, the price of 10 grams of 24 karat gold rose by Rs.1,029, reaching Rs.196,674 from Rs.195,645. Meanwhile, 10 gram 22 karat gold witnessed an uptick to Rs.180,284 from Rs.179,341. These price movements were reported by the All Sindh Sarafa Jewellers Association.
US DOLLAR WEAKNESS AND GOLD PRICES
Gold prices, particularly XAU/USD, surged to a two-day high near $2,190 during the European trading session on Tuesday. This spike was fueled by a weakening US Dollar, which faced downward pressure due to growing confidence among Federal Reserve policymakers regarding easing price pressures. Despite recent inflation readings indicating higher-than-expected figures for January and February, the Federal Reserve anticipates three interest-rate cuts this year.
INVESTOR SENTIMENT AND FUTURE OUTLOOK
Investors closely monitored developments regarding the inflation outlook, seeking insights into the Federal Reserve’s potential actions regarding interest rates. The upcoming release of the United States core Personal Consumption Expenditure (PCE) price index data for February, scheduled for Friday, is anticipated to provide crucial indications.
IMPACT ON GOLD PRICES
The outlook for gold prices hinges on the interpretation of inflation data. If there are signs of easing price pressures, gold prices may strengthen as expectations for prolonged higher interest rates diminish. Conversely, persistent inflation could negatively impact gold prices, as it increases the opportunity cost of investing in the precious metal. In such scenarios, investors might shift towards interest-bearing assets like bonds, leading to higher yields.
TECHNICAL ANALYSIS
Momentum oscillators rise, bringing the price of gold back to $2,190. Following a decline to 64.00, the 14-period Relative Strength Index (RSI) is slightly higher. Due to very overbought signals displayed by oscillators, the price of gold significantly fell last week from all-time highs of $2,223.
Due to the rising 20-day Exponential Moving Average (EMA) around $2,145, there is bullish demand for gold in the near term.
The 161.8% Fibonacci extension level, at $2,250, may provide resistance for the gold price heading upward. From the peak on December 4 at $2,144.48 to the low on December 13 at $1,973.13, the Fibonacci tool is plotted. Conversely, the gold price bulls should be supported by the December 4 high of $2,144.48.
With 10-year US Treasury yields dropping to 4.24% amid expectations of interest rate reductions by the Federal Reserve starting from June, the gold market remains dynamic and sensitive to economic indicators.
STABLE SILVER PRICES
In contrast to gold, the prices of silver remained unchanged, with per tola and ten gram rates holding steady at Rs.2,580 and Rs.2,211.93, respectively. Despite the stability in silver prices, all eyes were on the gold market, especially amidst global economic shifts.
INTERNATIONAL MARKET TRENDS
The international gold market also saw an upward trend, with prices increasing by $6 to reach $2,193 from $2,187. This boost in gold prices was attributed to various factors influencing the global economic landscape, including the performance of the US Dollar.
