ISLAMABAD
Gold prices in the local market increased by Rs900 a tola on Tuesday, toeing an uptick in international bullion market where it surged to $2,000 an ounce.
According to the Karachi Sarafa Association, the price of one tola of 24-karat gold increased to Rs213,000 from Rs212,100. Similarly, the gold price for 10 grams of 24-karat gold increased to Rs182,613 from Rs181,842, showing an increase of Rs771. Following suit, the price for 10 grams of 22-karat gold remained unchanged at Rs166,688 as compared to the last session.
The upward momentum in gold prices prior to recent decline can be attributed to the rising gold prices internationally as well as rupee’s depreciation against the US dollar, the currency in which the yellow metal is valued. The rupee depreciated for the seventh straight session against the greenback.
On the other hand, as of 1150 hours GMT, gold futures in the international market were available at $1,999.30 per ounce, showing an increase of $3.80. Out of the $3.80 increase, +$2.05 was due to weakening of the US dollar and +$1.75 was due to predominant buyers, according to the Kitco Gold Index.
Gold price attracted some dip-buying on Tuesday following an intraday slide to the $1,990 region. The precious metal, however, remained below the $2,000 psychological mark amid expectations that the Federal Reserve would keep the door open for one additional rate hike in 2023 to bring inflation back to its 2 percent target. The hawkish outlook remained supportive of elevated US Treasury bond yields, which helped revive the US dollar demand and capped the non-yielding yellow metal.
Apart from this, Israel’s more measured approach to its incursion into Gaza has eased fears about a broadening crisis in the Middle East and further undermines the safe-haven gold price. That said, the risk of a further escalation in the Israel-Hamas conflict remains, which, along with the uncertainty over the economic recovery in China, assists the gold price in attracting some dip-buying near the $1,990 region.
From a technical perspective, the Relative Strength Index on the daily chart eased from overbought territory and supported prospects for the emergence of some dip-buying around the gold price. Hence, any subsequent decline is more likely to find support near the $1,986-1,985 horizontal resistance breakpoint. On the flip side, the $2,000 round figure, followed by the multi-month top, around the $2,005 area touched last Friday, now seems to act as immediate hurdles.
