Daily Times

Gold price surged for the fourth straight session on Tuesday to hit its highest level since August 2020. As of 1325 hours GMT, gold in the international market was available at $2,009.40 per ounce, gaining $10.80. Out of a $10.80 per ounce increase, +$2.10 was due to the dollar’s weakness and +$8.70 was due to predominant buyers, according to Kitco Gold Index.

The price of 10 grams of 24-carat yellow metal in Pakistan, meanwhile, increased to Rs115,600 after gaining Rs300. Gold in the local market was available at Rs115,300 on Monday last. The local prices increased due to increase in gold prices internationally as well as depreciation of the Pakistani rupee against the US dollar during the day.

Gold witnessed two-way price move during the day and attracted some dip-buying near the $1,980 region. The momentum pushed spot prices further beyond the key $2,000 psychological mark or the highest level since August 2020. Investors continue to dump riskier assets amid worries about the potential economic fallout from Russia’s invasion of Ukraine. This, along with the growing risk of stagflation, dented the already weaker risk sentiment and provided a fresh lift to the safe-haven precious metal.

Moreover, the latest leg up could further be attributed to subdued US dollar price action, which tends to benefit the dollar-denominated commodity. The rising US bond yields could act as a headwind for the non-yielding yellow metal and keep a lid on any further gains. The benchmark 10-year US Treasury bond yield was up more than 3pc on the day, putting additional weight on the gold price. Geopolitics is the primary market driver, as investors remain focused on the Russia-Ukraine crisis, and the risk perception is likely to continue to impact gold’s market valuation.

From a technical perspective, the overnight correction in gold price offered the much-needed impetus to bulls, as they keep their sights on the $2,034 level. The Relative Strength Index (RSI) has retraced from the overbought territory and is still above the midline, suggesting that there remains room to rise for gold price. With the bullish breakout, gold price is positioned to retest the first resistance at $2,021. The next level of resistance is $2,034. On the flip side, the immediate cushion is seen at $1,981, which is the intraday low. The next downside target is seen at Monday’s low of $1,961, which also coincides with the 21-SMA.