After closing the last week on a positive note at $1,768.40 per ounce, with a gain of $10.30 (+0.59 percent) on a week-on-week basis, gold is expected to edge slightly higher in the near term. Overall, the gold price has shed around 4 percent during the last five weeks, with a major dip of 1.60 percent in price was witnessed on Friday last due to rebound in the US Treasury yields.
Meanwhile, the price of gold increased by 0.94 percent in Pakistan during the last week. The price of 10 grams of yellow metal in Pakistan was Rs96,300 at the opening of the last week and it increased to Rs97,200 to close the week.
The difference in appreciation in gold price in the local and international markets was due to depreciation of the local currency, which depreciated by 0.38 percent against the US dollar during the week, with the dollar opening at Rs170.53 on Monday last and closing at Rs171.18 on Friday last.
Gold spent the first two trading days of the last week fluctuating in a tight range above $1,750. With the US Treasury bond yields falling sharply, gold gathered strength and gained nearly 2 percent on Wednesday and crossed the $1,800 mark on Thursday. However, Friday proved to be a tough day for gold amid rising US T-bond yields that erased the majority of its weekly gains to settle at $1,768.40.
During this week, China’s gross domestic product (GDP) data as well as September retail sales and industrial production data will be released on Monday. Investors expect the Chinese economy to grow by 5.2 percent on a yearly basis after expanding by 7.9 percent in the second quarter. If these results point to a considerable slowdown in the second-biggest economy, gold’s safe-haven outlook could gain benefit.
In the meantime, investors will pay attention to the US Treasury bond yields. The benchmark 10-year US T-bond yield has managed to hold above the key 1.5 percent level despite the weekly decline and gold could come under bearish pressure in case the dollar capitalises on rising yields.
From a technical outlook, the Relative Strength Index (RSI) indicator on the daily chart has returned to 50, suggesting that buyers are struggling to remain in control of gold’s action. The initial support is located at $1,768; however, a daily close below that level could open the door for additional losses toward the 20-day SMA at $1,760 and $1,750 (lower limit of the previous trading channel). On the upside, the 50-day SMA seems to have formed dynamic resistance at $1,780 before $1,800. In case buyers manage to lift the price above $1,800, the recovery could extend toward $1,825. However, a fundamental trigger is needed for gold to stay above the 1,800 mark.
The writer heads a leading news wire service ‘The Law Today Pakistan’ commonly known as TLTP. He has a special focus on news relating to superior courts adjudication, Right of access to RTI, civil, political, social and economic rights under the approach that existing cyber regime realization ensures procedural fairness. He can be reached at firstname.lastname@example.org