ISLAMABAD: Gold price in the country surged by Rs5,500 (+2.59 percent) per tola on a week-on-week basis after dropping by Rs27,300 (-11.38 percent) in the preceding week, following an uptick in international prices.
The gold rate for a single tola of 24-karat on a week-on-week (WoW) basis increased to Rs218,000 from Rs212,500, according to different local gold markets. Similarly, the gold rate for 10 grams of 24-karat surged to Rs186,900 from Rs182,184 a week ago, showing an increase of Rs4,716. Likewise, 10 grams of 22-karat gold were being traded for Rs171,324 while a single tola of 22-karat gold was being sold at Rs199,832.
It is to be noted that local bullion pricing body, Karachi Sarafa Market, has refrained from announcing daily commodity prices since Wednesday and the prices quoted above are being collected from different markets. This is sparking speculation about potential actions against “gold smugglers” or a downward trend in the country’s precious metal market, leading to silence from the pricing body. A member of the body officially confirmed that the last gold price announced on Tuesday at Rs215,000 per tola (11.66 grams) remained unchanged for the time being.
The Pakistani rupee extended gains against the US dollar last week and appreciated by 2.01 percent in the interbank market and 1.32 percent in the open market. Since gold is denominated in the US dollars and when the local unit appreciates against the greenback, the value of gold in the local market falls. However, the situation remains unclear as an uptick in gold price internationally last week was relatively lower than the rupee’s gains against the US dollar.
In global markets, gold closed the week at $1,924.10 per ounce against $1,918.70 in the preceding week, showing a week-on-week increase of $5.40 (+0.28 percent). Gold tested the $1,900 area this week, influenced by the latest US economic reports, but it managed to hold above and rebounded, erasing weekly losses. The overall bias remains tilted to the downside, with the strong US dollar weighing on the yellow metal.
The data from the US indicates that the economy is not currently heading towards a hard or soft landing. The labour market is softening but far from hinting at a recession. The economic context allows for more rate hikes from the Federal Reserve if policymakers decide to do so. Inflation data from this week showed no immediate need for further action, but it is insufficient to remove the hawkish bias.
The short-term outlook for gold remains unclear. While the rebound on Friday alleviated some bearish pressure, gold is still below the 20-week Simple Moving Average (SMA), although it has managed to stay above $1,900. If the recovery continues, gold price could potentially extend towards the $1,950 area, which presents a strong barrier. A weekly close above $1,950 would indicate a positive development, suggesting further upside potential. Conversely, a drop below $1,910 would hint at further weakness, with the following key support at $1,880. A break below that level could target the $1,860 zone. TLTP
