Gold prices drop by Rs5,550 per tola for third week

ISLAMABAD: Gold prices in the country eased by Rs5,550 (-2.44 percent) per tola last week, falling for the third straight week, while gold prices in the international bullion markets edged lower by 0.13 percent after rising for two consecutive weeks.
The gold rate in Pakistan for a single tola of 24-karat on a week-on-week (WoW) basis fell to Rs221,700 from Rs227,250, according to the data provided by All Pakistan Sarafa Gems and Jewellers Association.
Similarly, the gold rate for 10 grams of 24-karat dipped to Rs190,070 from Rs194,830 on WoW basis, showing a decrease of Rs4,760. Likewise, the gold rate for 10 grams of 22-karat fell to Rs174,230 from Rs178,600.
As far as Pakistan rupee-US dollar parity is concerned, as gold is valued in USD, the local unit depreciated 0.09 percent against the greenback in the interbank market on a week-on-week basis. According to the figures shared by the central bank, the rupee fell from 286.93 to 287.19 against the greenback. However, the rupee surged 2.68 percent against the US dollar in the open market and improved from the range of Rs302-305 to Rs294-297.
The domestic gold market has been volatile for the last 15 months due to economic and political turmoil, high inflation, and currency depreciation. People prefer to buy the yellow metal in such times as a safe investment and a hedge to protect themselves against inflation and currency depreciation. The delay in the revival of the programme negatively impacted the currency market which in turn is bolstering demand for gold.
In global markets, the gold price inched down to $1,958.20 from $1,960.70 per ounce, showing a weekly decline of $2.5 (-0.13 percent) for the first time in three weeks.
Overall, the week witnessed volatile trading sessions. Following a quiet trading day on Monday, gold prices turned south on Tuesday amid concerns over an economic slowdown in China. However, lower than expected inflation figures from the United States weighed on the US dollar, helping the gold prices to find some support.
The US Federal Reserve’s decision to hold the policy rate steady at the range of 5-5.25 percent on Wednesday provided a boost to US Treasury bond yields and did not allow the gold prices to gain traction. Gold price declined below $1,930 on Thursday, its lowest level in three months, as US Treasury bond yields rebounded, but reversed its direction ahead of the weekend as the US dollar faced heavy selling pressure on Friday.
From a technical viewpoint, the 100-day Simple Moving Average, currently located at $1,940, proved to be a tough support last week as gold managed to close above that level. Moreover, the Relative Strength Index indicator on the daily chart is staying below 50, pointing to a buildup of bullish momentum.
In case gold falls below $1,940 and makes a daily close there, an extended slide toward $1,925 (static level) and $1,900 (psychological level) could be witnessed. On the flipside, gold needs to confirm $1,950 (20-day SMA) as support. In that scenario, $1,980 (50-day SMA) and $2,000 (psychological level) could be set as the next targets on the upside. – TLTP