Gold futures extended the overnight retracement slide from over a two-week high and witnessed selling for the second successive day on Thursday despite a weaker US dollar. As of 1225 hours GMT, gold in the international market was available at $1,845.60 per ounce, shedding $8.60 (-0.46 percent). Out of the $8.60 per ounce decrease, +$1.10 was due to weakening of the US dollar and -$9.70 was due to predominant sellers, according to Kitco Gold Index.
The price of 10 grams of 24-carat yellow metal in Pakistan, decreased to Rs120,200 after shedding Rs400. Gold price in the local market remained Rs120,600 on Wednesday last. A relatively lower decrease in the local gold prices was due to Pakistani rupee’s continuous depreciation against the US dollar during these days. The local unit has depreciated by over 8 percent during the last 14 sessions. The Federal Reserve’s May meeting minutes, released on Wednesday, reaffirmed that central bank officials saw additional 50 basis point rate hikes as appropriate in June and July. Apart from this, the worsening global economic outlook benefitted the US dollar’s status as the global reserve currency which, in turn, undermined demand for the dollar-denominated gold.
The downside, however, seems cushioned amid a generally weaker tone around the equity markets, which tends to benefit the safe-haven gold. The prospects for a more aggressive move by major central banks to constrain inflation, along with the Russia-Ukraine war, have been fuelling recession fears and continued weighing on investors’ sentiment. From a technical perspective, the gold price enjoys strong support at $1,838. A sustained break below the $1,838 demand area will trigger a fresh downswing and a steep drop towards $1,827 will be in the offing. On the upside, bullion bulls could face initial resistance at $1,850. Bulls will then look to breach $1,854. Further up, $1,858 will be the level to beat for gold buyers.