Daily Times

The gold prices bounced back in the international market last week after facing a retreat in the preceding week, though a slight bearish bias stays intact.

The gold prices gained 1.17 percent last week, surging from $1,797 to $1818.10 per ounce. The prices have surged during the four out of last five weeks in the international market, with the first week-on-week increase in the current year.

Meanwhile, the price of gold in Pakistan ended a two-week losing streak last week, gaining 0.68 percent on a week-on-week basis. The price of 10 grams gold increased from Rs102,200 to Rs102,900 during the last week, after witnessing a decrease of 1.21 percent and 0.10 percent in the preceding two weeks respectively.

The relatively lower increase in local gold price was due to the rupee’s appreciation against the US dollar during the period under review. The rupee appreciated by 0.34 percent against the American currency, recovering from 176.67 to 176.07 during the aforementioned period.

The main factor behind the increase in the prices of the yellow metal was the struggling US dollar. The US dollar headed for its largest weekly fall in eight months, turning commodities into a more affordable purchase for holders of other currencies. The US dollar index was 0.1 percent higher at 94.931, but finished the week down by about 0.9 percent, representing its worst weekly showing in eight months.

On the upside, the key resistance area seems to have formed at $1,830, where the Fibonacci 23.6pc retracement of the uptrend that started in October and ended in mid-November is located. With a daily close above this resistance, gold can target $1,850 ahead of December highs at $1,870.

On the flip side, if the corrective downside picks up pace then a retest of Thursday’s low of $1,812 will be imminent. The further downside will challenge the 21- and 50-DMAs confluence at $1,808, below which the mildly bullish 200-DMA at $1,803 will come to the rescue of gold bulls. Gold enjoys strong support at $1,800 but any break below this level may invite additional losses towards $1,790, which is 100-day SMA.