ISLAMABAD: Gold prices in the local market increased for the third straight day by Rs2,000 per tola on Wednesday amid a raise in international bullion prices. According to the Karachi Sarafa Association, the price of one tola of 24-karat gold increased to Rs214,800 from Rs212,800. Similarly, the gold price for 10 grams of 24-karat gold increased to Rs184,156 from Rs182,442, showing an increase of Rs1,714. The Pakistani rupee maintained its losing streak against the US dollar in the inter-bank market for the 17th consecutive session and depreciated by 27 paisas to 288.14. Rupee’s depreciation makes gold costlier for local buyers as gold is rated in US dollars. During the last three sessions, gold prices in the local market has increased by Rs3,800 per tola. Gold price in the country decreased by Rs3,600 (-0.61 percent) per tola last week as the gold rate for a single tola of 24-karat on a week-on-week (WoW) basis decreased to Rs211,000 from Rs214,600, according to Karachi Sarafa Market. On the other hand, as of 1115 hours GMT, gold futures in the international market were available at $1,971.90 per ounce, showing an increase of $9.20. Out of the $9.20 increase, -$2.25 was due to strengthening of the US dollar and +$11.45 was due to predominant buyers, according to the Kitco Gold Index. TLTP
Gold price is trading close to the highest level so far this week near $1,971, unperturbed by the risk-rally on the global stock markets, a minor bounce in the US dollar and the US Treasury bond yields. The revival of the dovish US Federal Reserve (Fed) policy expectations remained the primary factor underpinning gold price.
On Tuesday, the high-impact US Consumer Price Index (CPI) data came in softer-than-expected and reinforced expectations that the Federal Reserve is done hiking interest rates, smashing the US Treasury bond yields across the curve. The US headline annual CPI rose 3.2 percent in October, down from the 3.7 percent increase reported previously.
The core inflation fell to 4 percent year-on-year in the reported period, as against a 4.1 percent rise seen in September. The monthly inflation figures also cooled down more than expected in October, helping completely take Fed interest rate hike expectations off the table.
The gold price rebound from the critical 200-day Simple Moving Average (SMA) at $1,935 on Monday found extra legs a day before, enabling the bright metal to retest the 21-day SMA at $1,973. The 14-day Relative Strength Index (RSI) pierced through the 50 level, swinging back into bullish territory, suggesting that gold buyers are likely to remain in control.
Daily closing above the 21-day SMA at $1,973 is critical to unleashing further upside towards the $1,980 round number. The next relevant upside barrier is placed at the November 6 high of $1,993, above which the $2,000 mark will come into play. On the other hand, any pullback from the weekly high could test initial demand around $1,960, below which the $1,950 psychological level will be on sellers’ radars.
