Gold surges as rate cut hopes strengthen

Prices jump Rs7,700 per tola amid global expectations; rupee extends winning streak

KARACHI:

Gold prices in Pakistan rose sharply on Tuesday, tracking a largely steady trend in the international market, where softer-than-expected US retail sales strengthened expectations of a Federal Reserve rate cut in December.

In global trade, spot gold inched down 0.2% to $4,130.85 per ounce by 09:36 am ET (1436 GMT), after earlier touching its highest level since November 14. The yellow metal had rallied nearly 2% on Monday as several Fed policymakers voiced support for a third rate reduction this year.

In the domestic market, gold per tola climbed by Rs7,700 to reach Rs436,562, according to data shared by the All-Pakistan Gems and Jewellers Sarafa Association. Similarly, the price of 10-gram gold rose by Rs6,601 to settle at Rs374,281. A day earlier, the per-tola price had remained unchanged at Rs428,862.

Silver prices also witnessed an upward movement, increasing by Rs152 to touch Rs5,422 per tola.

Commenting on the market outlook, Adnan Agar, Director at Interactive Commodities, said gold remained firm on Tuesday. "The low was $4,109, and the high was $4,155. Its actual resistance levels are $4,155 and $4,180. If the market breaks above these and closes higher, there is room for further upside," he noted.

Agar added that gold was holding near $4,125 after briefly touching the low of $4,109. "If the market slips below $4,050 or $4,025, it could trigger a downtrend. Otherwise, the trend looks slightly bullish. A close above the $4,155-$4,180 zone for at least a day could push gold towards new highs," he said.

US gold futures for December delivery rose 0.8% to $4,127.40 per ounce. "There's revived hope for a December rate cut based on recent dovish Fed speak, and this (data) doesn't seem to be changing that," said Peter Grant, Vice President and Senior Metals Strategist at Zaner Metals.

US retail sales increased less than expected in September, taking a breather following a recent stretch of strong gains. Meanwhile, data showed that for the 12 months through September, the US producer price index increased 2.7% after advancing by the same margin in August. The report was delayed by the 43-day shutdown of the US government.

Furthermore, China's net gold imports via Hong Kong in October fell about 64% from September, the Hong Kong Census and Statistics Department data showed on Tuesday, according to Reuters.

As the world's leading gold consumer, China's purchasing activities can significantly influence global bullion markets.

Moreover, Barrick Mining has agreed to a 244 billion francs ($430 million) settlement with Mali, Bloomberg News reported, citing people familiar with the matter.

The Canadian miner on Monday reached an agreement with Mali's government to resolve all their disputes over the Loulo-Gounkoto gold mining complex after two years of negotiations.

The Pakistani rupee extended its gains against the US dollar on Tuesday, appreciating 0.01% in the inter-bank market. By the end of the session, the currency stood at 280.57, up by Rs0.04 from the previous day's value. On Monday, the rupee had settled at 280.61.

In global trade, the US dollar held steady as investors assessed the likelihood of a Federal Reserve rate cut next month following dovish remarks from policymakers. The weakening Japanese yen also stayed under close watch for potential intervention.

Fed Governor Christopher Waller said the labour market has softened enough to justify a quarter-point rate cut in December, though further moves would depend on upcoming data delayed by the recent government shutdown.