ISLAMABAD
Gold extended declines on Thursday following Wednesday’s sharp drop after the US central bank indicated interest rate hike in March.
As of 1230 hours GMT, gold in the international market was available at $1,808.30 per ounce, shedding $11.10. The release of the Fed’s latest policy statement triggered a jump in the US Treasury bond yields and the dollar, dimming appetite for non-yielding gold. International gold prices dropped over 2 percent in two days.
The price of 10 grams of yellow metal in Pakistan, meanwhile, decreased to Rs103,400 after shedding Rs1,300. Gold in the local market was available at Rs104,700 on Wednesday. A relatively higher decrease in the local gold prices was due to depreciation in the prices a day earlier when the local market was closed.
Gold price is pressured by the hawkish Fed’s rhetoric-driven sell-off, as the central bank said that there is room for interest rate hikes, adding that the plans for the balance-sheet reduction are in the offing. The US Treasury yields continue taking advantage of the Fed’s hawkishness, underpinning the dollar bulls at gold’s expense.
Further, expectations of aggressive Fed tightening killed the appetite for riskier assets such as stocks and boosted the greenback’s safe-haven demand, exerting additional bearish pressure on gold price.
From a technical perspective, gold enjoys strong support at $1,805 level, which is the confluence of the previous week’s low, SMA200 one-day and SMA50 one-day. The next line of defence for gold buyers is seen at the $1,800. If the gold closes below this level, it will open the door for more losses towards the $1,790 area.
On the flip side, the gold price is attempting a bounce after having found support at the convergence of the SMA200 four-hour and pivot point one-week S1 at $1,809. In doing so, the bright metal has cleared the Fibonacci 23.6% one-month at $1,813 to take on the previous day’s low of $1,815. Acceptance above the latter will call for a fresh rally towards $1,822, the meeting point of the Fibonacci 61.8% one-week and SMA100 four-hour.
