ISLAMABAD: Gold price in the country decreased by Rs800 (-0.37 percent) per tola on a week-on-week basis amid rupee’s appreciation against the US dollar despite a surge in international bullion prices.
The gold rate for a single tola of 24-karat decreased to Rs215,700 from Rs216,500, according to All Pakistan Gems and Jewellers Sarafa Association (APGJSA). Similarly, the price of 10 grams of 24-karat gold closed at Rs184,928 against Rs185,614 at the start of the week, reflecting a decrease of Rs686. In global markets, gold closed the week at $2,002.70 per ounce against $1,981.10 in the preceding week, showing a week-on-week increase of $21.60 (+1.09 percent) and surging for the second consecutive week.
The Pakistani rupee made gains against the US dollar for the second week in a row and improved by Rs1.13 in the interbank market and Rs3 in the open market. The rupee closed at 285.37 in the interbank and 283-286 in the open market. Since gold is denominated in the US dollars, when the local unit appreciates against the greenback, the value of gold in the local market decreases if all other factors remain the same.
As global prices remained on an upward trend and rupee’s appreciation remained relatively lower, the price of yellow metal is likely to go up in the country in the coming week. With a premium of $20, the international rate of gold on Friday was set at $2,013 per ounce, APGJSA said. As closing of the international market was late due to time difference, the international rate of gold on Monday would be set at $2,022 and this may move local prices upward.
Gold tested $2,000 for the second time this month but found it difficult to stabilize above this key level due to a lack of fundamental drivers and thin trading volumes in the second half of the week. Although next week’s economic calendar will offer high-tier data releases, gold’s stabilization above $2,000 could depend on a steady decline in the US Treasury bond yields.
The US Bureau of Economic Analysis will release the second estimate of the annualized third-quarter Gross Domestic Product (GDP) growth on Wednesday. A significant downward revision to the initial estimate of 4.9 percent could weigh on the US dollar with the immediate reaction and help gold price edge higher. The NBS Manufacturing and Non-Manufacturing PMI from China will be watched closely on Thursday by market participants. Signs of improvement in the business activity in China, the world’s biggest consumer of gold, could support gold prices.
From a technical perspective, the Relative Strength Index (RSI) indicator on the daily chart turned flat near 60, suggesting that gold price is struggling to gather momentum despite keeping the bullish bias. Key resistance is located at $2,000 (psychological level, static level). Once the pair confirms it as support, technical buyers could take action. In this scenario, $2,010 (static level) and $2,040 (static level) could be set as the next bullish targets.
On the downside, the 20-day Simple Moving Average forms dynamic resistance at around $1,980. A daily close below this level could open the door for an extended slide towards $1,950 and $1,940-$1,935 (200-day SMA, 100-day SMA). – TLTP