The domestic bullion market saw significant gains on Saturday, aligning with the international price movements. The price of 24-karat gold surged by Rs3,100, reaching Rs248,100 per tola. Similarly, 24-karat silver increased by Rs120, bringing its price to Rs2,850 per tola.
On the global stage, spot gold experienced a 2.3% increase this week, closing at $2,415.2 an ounce. Meanwhile, spot silver surged 11.9% to $31.49 an ounce, marking its highest level since 2013.
It’s noteworthy that the current price of gold in the domestic market has been intentionally set Rs4,000 below its actual cost. The Karachi Sarafa Association explained this decision, stating, “In view of the significant reduction in purchasing power, the price of gold today has been kept under cost by Rs4,000.”
Last week, 24-karat gold gained Rs5,500 per tola, reflecting the robust performance in the domestic market. The Karachi Sarafa Association also reported that the price of 24-karat gold per 10-gram increased by Rs2,658, reaching Rs212,706. Similarly, the price of 22-karat gold was quoted higher at Rs194,980 per 10-gram.
The surge in gold and silver prices is driven by multiple factors, including increased investor interest, a supportive macroeconomic environment, and supply deficits in the market. These factors have combined to push both metals to new heights.
Phil Streible, chief market strategist at Blue Line Futures, likened the recent surge to the recreation of the meme stock phenomenon, noting, “Those speculators naturally look for different areas to exploit. And silver is usually the one that they favor.”
This sentiment was echoed in the broader metals markets, contributing to the accelerated price rally seen on Friday. TD Securities’ senior commodity strategist Daniel Ghali mentioned that the breakthrough of silver past the $30 level might lead to substantial buying activity by exchange-traded funds, increasing the likelihood of a silver squeeze.
Despite the recent rally, investors have been net sellers of physically backed silver ETFs, with holdings down 1.7% as of Thursday, according to Bloomberg data. However, bullish bets on Comex silver futures by money managers have risen to their highest level in over two years.
Silver’s dual role as both a financial asset and an industrial input, especially in clean-energy technologies, further supports its bullish outlook. The metal is essential for solar panel production, an industry that continues to grow rapidly. The Silver Institute forecasts record usage of the metal this year.
TECHNICAL ANALYSIS: GOLD PRICE RISING IN CHANNEL
Gold Price (XAU/USD) Overview
Gold (XAU/USD) is currently trading back up at a key resistance level of $2,400. The precious metal has been rising within a channel since the May 2 lows, indicating a bullish short-term trend with more upside potential expected.
XAU/USD 4-hour Chart Analysis
- Current Trend: Gold has been consistently rising within a channel, suggesting a continuation of the bullish momentum.
- Resistance Levels:
- Immediate Resistance: $2,400
- Next Resistance: $2,417 (the April 19 high)
- All-Time High: $2,430
- Relative Strength Index (RSI): The RSI has retreated from the overbought zone, indicating renewed potential for further upside movement. This pullback provides room for additional gains before hitting overbought conditions again.
Medium and Long-Term Outlook
- Daily and Weekly Charts: Both medium and long-term charts display bullish patterns, providing a supportive backdrop for gold’s upward trajectory.
Key Technical Indicators
- Support Levels: The lower boundary of the rising channel serves as a critical support level. Any pullback within the channel could find support around $2,350 to $2,360, maintaining the overall bullish structure.
- Moving Averages: Gold is trading above its key moving averages (50-day and 200-day), which reinforces the bullish outlook. The alignment of moving averages suggests that the current trend is well-supported.
Potential Scenarios
- Bullish Scenario: A successful break above the $2,400 resistance level increases the likelihood of a rally to $2,417, followed by a potential test of the all-time high at $2,430. Continuation of the upward channel trend would further confirm this bullish scenario.
- Bearish Scenario: Failure to break above $2,400 could result in a pullback towards the lower boundary of the channel, around $2,350-$2,360. A break below this support could shift the short-term outlook to bearish, targeting further downside towards $2,300.
Conclusion
The technical analysis of gold price (XAU/USD) indicates a bullish short-term trend within a rising channel, with significant potential for further gains. The RSI’s retreat from the overbought zone and the bullish alignment on medium and long-term charts provide a solid foundation for expecting more upside. Key resistance levels to watch are $2,417 and $2,430, while the lower boundary of the channel around $2,350-$2,360 acts as critical support. Investors should monitor these levels to gauge the future direction of gold prices.
