ISLAMABAD: Gold price in the country extended gains and increased by Rs600 per tola on Monday after the price of the yellow metal in the international market jumped to an all-time high.
According to the data provided by the Karachi Sarafa Association, the price for one tola of 24-karat gold increased to Rs245,700 from Rs245,100. Similarly, the price for 10 grams of 24-karat gold increased to Rs210,648 from Rs210,134, showing an increase of Rs514. Following suit, the price for 10 grams of 22-karat gold increased to Rs193,094 from Rs192,620, going up by Rs474 as compared to the previous session.
Earlier, gold price surged by Rs10,300 (4.39 percent) per tola last week to Rs245,100. The rally currently being witnessed in the domestic bullion has been on since March in which the yellow metal gained a substantial Rs19,100 per tola. It is crucial to note that the previous highest price for 24-karat gold was Rs240,000 per tola observed on May 10, 2023.
On the other hand, gold futures in the international market were available at $2,338.90 per ounce, showing an increase of $9.70. Out of the $9.70 increase, -$2 was due to strengthening of the US dollar and +$11.70 was due to predominant buyers, according to the Kitco Gold Index.
Expectations that the Federal Reserve (Fed) will start cutting rates in 2024, along with buying from the Chinese central bank, have been significant drivers of the precious metal’s blowout rally over the past two weeks. Meanwhile, the upbeat US Nonfarm Payrolls report released on Friday last suggested that the Fed may delay cutting interest rates and force investors to scale back their expected rate cuts in 2024 to two from three. The outlook remains supportive of elevated US Treasury bond yields, which underpins the US dollar and should further contribute to keeping a lid on the non-yielding gold price.
From a technical perspective, the Relative Strength Index (RSI) on the daily chart is flashing extremely overbought conditions. This, in turn, makes it prudent to wait for some near-term consolidation or a modest pullback before the next leg up. Nevertheless, the setup suggests that the path of least resistance for the gold price is to the upside, and any corrective decline might still be seen as a buying opportunity. Meanwhile, the $2,305-2,300 area seems to protect the immediate downside ahead of Friday’s swing low, around the $2,267-2,265 region. A convincing break below the latter might prompt some technical selling and drag the gold price to the $2,223-2,222 zone en route to the $2,200 mark. – TLTP