Gold prices, denoted by XAU/USD, experienced a pullback after reaching a fresh record high earlier in the week, primarily influenced by stronger US macroeconomic data. This data suggested a resilient economy, raising doubts about whether the Federal Reserve would proceed with its anticipated interest rate cuts. The resultant shift in outlook led to elevated US Treasury bond yields, prompting some profit-taking around gold, especially following its recent strong rally over the past week.
The protracted Russia-Ukraine war and the possibility of the Israel-Hamas conflict spreading to the wider Middle East region pose geopolitical uncertainties that make any significant correction decrease in the gold price seem improbable. This, coupled with the unpredictability around the Fed’s rate-cutting intentions and the tragic earthquake that struck Taiwan, should provide support for the safe-haven precious metal during a little decline in the US dollar (USD). Traders are now looking for new inspiration in the form of US macrodata and Fed speeches.
TECHNICAL ANALYSIS
However, despite the corrective decline, bullish traders might still perceive this pullback as an opportunity. From a technical standpoint, gold prices have been steadily climbing into uncharted territory, with momentum indicating the potential for bulls to push prices beyond the $2,300 mark. Nonetheless, caution is warranted as the Relative Strength Index (RSI) on the daily chart is signaling extremely overbought conditions. As a result, traders may prefer to await some near-term consolidation or a modest pullback before considering further gains.
In the event of a corrective decline, support levels are anticipated near the $2,265 area, followed by the $2,250 level. Should these levels fail to hold, technical selling pressure may intensify, potentially dragging gold prices back toward the $2,228 region, which marks the weekly low. A decisive break below this level could signal a shift in near-term bias in favor of bearish traders, potentially targeting the psychologically significant $2,200 mark.
Ultimately, the movement of gold prices in the near term will likely be influenced by a combination of factors, including US macroeconomic data releases, speeches by Federal Reserve officials, geopolitical tensions, and market sentiment regarding the broader economic outlook.
PAKISTAN
The price of domestic gold in Pakistan has surged, rapidly approaching its all-time high level. The price of 24-karat gold has reached Rs238,900 per tola, marking an increase of Rs1,800 on the day. This places local gold just Rs1,100 shy of touching its all-time high level of Rs240,000 reached back in June 2023.
The significant rise in gold prices is attributed to several factors, including a substantial increase of Rs19,100 in March, aligning with the surge in international gold prices. The Karachi Sarafa Association reported that the price of 24-karat gold reached Rs204,818 per 10 grams, up Rs1,543 compared to the previous session. Similarly, the price of 22-karat gold was quoted higher at Rs187,750 per 10 grams.
Internationally, gold rates continue to rise amidst tensions in the Middle East and strengthened hopes for a rate cut soon by the U.S. Federal Reserve. Spot gold closed yesterday’s trading session at a new all-time high of $2,280.82.
Daniel Ghali, commodity strategist at TD Securities, noted that the surge in gold prices is attributed to safe-haven demand stemming from Israeli strikes on Iran’s embassy in Syria. Additionally, short covering from family offices and proprietary trading shops may have contributed to the latest leg up in gold prices.
