Daily Times

Gold prices inched up from a two-week low on Friday amid a rebound in the global equity markets. As of 1155 hours GMT, gold in the international market was available at $1,792 per ounce, gaining $1.10. The price of 10 grams of yellow metal in Pakistan, meanwhile, went down to Rs101,700 after shedding Rs400. Gold in the local market was available at Rs102,200 on Thursday last.

Decrease in the price of yellow metal in the local market was due to an overnight decrease in its price when the local market was closed. Moreover, the Pakistan rupee also appreciated by 0.14 percent against the American currency on Friday, which also eased the local gold prices.

The gold price witnessed the overnight sharp decline from $1,810 to around $1,790 on Thursday last due to the effects of the minutes of the December 14-15 Federal Open Market Committee (FOMC) meeting, released on Wednesday, which said that most of the participants judged conditions for a rate hike could be met soon if the recent pace of labour market improvements continued.

It is quite clear that the US policymakers are more concerned about inflation than about economic growth. This supported the US dollar, which has been volatile yet choppy in the last couple of weeks. On the other hand, the US Treasury bond yield on the 10-year note has topped at 1.744 percent so far.

From a technical perspective, the $1,800 mark, coinciding with a technically significant 200-day SMA, now seems to act as immediate strong resistance. A sustained strength beyond might trigger a short-covering move and push gold prices towards the $1,815 hurdle. Some follow-through buying should allow bulls to aim back to challenge a strong barrier near the $1,830-32 region. On the flip side, this week’s rejection near the $1,830-32 supply zone and the subsequent downfall might have already shifted the bias in favour of bearish traders. The rising trendline support at 1,789 will confirm the bearish continuation formation, calling for a retest of the $1,785 support area.