Daily Times

After closing the last week on a positive note at $1,793 per ounce, with a gain of $24.60 (+1.39 percent) on a week-on-week basis, gold is expected to reclaim $1,800 mark in the short-term and may cross the Friday’s high level of $1,813 this week.

The price of gold increased by 3.40 percent in Pakistan during the last week. The price of 10 grams of yellow metal in Pakistan was Rs97,200 at the opening of the last week and it increased to Rs100,500 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 1.65 percent against the US dollar during the week, with the dollar opening at Rs171.18 on Monday last and closing at Rs174 on Friday last.

From a technical outlook, although the relative strength index (RSI) on the daily chart edged higher to 60, it is difficult to say that the outlook is bullish unless gold makes a decisive move above the $1,795-$1,800 area where the Fibonacci 50pc retracement of April-June uptrend, 100-day SMA and the 200-day SMA meet. Above that resistance, $1,825/30 area could be seen as the next target before $1,840 (static level). On the downside, $1,780 (50-day SMA) aligns as the first support ahead of $1,770 (former resistance). Sellers are likely to maintain control of the action as long as the above-mentioned resistance holds.

Gold prices surged for all five sessions of the week, as the US dollar faded its recovery rally amid improving market mood while the US Treasury bond yields fell sharply. According to experts, as global investors assess the risks of high inflation, gold prices could soon double. They said the popularity of the precious metal has grown as it is seen as a means of protection against high inflation, a common trend in many countries around the globe despite the assurances of the financial authorities that the phenomenon is temporary.

They said that gold prices are supported by growing fears about inflation and a decline in the dollar index at the end of the trading week. In recent weeks, the dollar has been weakening against a number of major world currencies, in particular, the euro, the yen and the yuan, while the dollar index has dropped by 0.2 percent, to 93.58 points. They said that global inflationary pressures are not as transitory as central bankers and consumer price indexes suggest and when investors realise this, it could propel gold prices up to $3,000 an ounce. They noted that because gold is a universal asset and has a some 4,000-year history, it is better positioned than, for instance cryptocurrencies, as a hedge against an inflationary environment.