ISLAMABAD: Gold ends third consecutive week on a positive note with 1.67 percent gain, though it shed 3.59 percent in 2021.
However, on a month-on-month basis, the gold price surged 3.44 percent ($60.90) from $1,768.90 on November 30 to $1829.80 on December 31, 2021.
Gold in the international market opened at $1,799.70 per ounce on Monday last and closed at $1,829.80 on the last session of the week, showing the highest close since November 19. During 2021, the gold price dropped by $68.20 (-3.59 percent) from $1,898.10 per ounce to $1,829.80.
The price of 10 grams gold in Pakistan, meanwhile, decreased from Rs103,550 to Rs103,450 during the last week, down by 0.10 percent. The depreciation in local gold price was due to the rupee’s depreciation against the US dollar during the period under review. The US dollar depreciated by 0.91 percent from Rs178.13 to Rs176.51 during the aforementioned period.
However, on a year-on-year basis, the local gold price surged from Rs97,500 to Rs103,450 in 2021, showing an increase of 6.10 percent. Likewise, on a month-on-month basis, the gold price surged from Rs101,000 on November 30, 2021 to Rs103,450 on December 31, 2021, showing an increase of 2.43 percent.
The gold prices jumped from earlier weekly lows in the $1790 area after finding support at the 21-day moving average as US real yields slid. Despite a notable improvement in the market’s broader appetite for risk as Omicron-related fears about potential economic disruption and hawkish policy shifts at major central banks, spot gold posted a healthy monthly gain of about 2.5 percent, having rebounded more than 3.5 percent from earlier monthly lows under $1760.
According to experts, the signs that the Omicron variant might be less severe than feared remained supportive of a generally positive risk tone and undermined gold. Investors turned optimistic after reports indicated that the current vaccines may be more effective than first thought in fighting the Omicron variant. Moreover, studies suggested reduced risks of hospitalisation and severe disease in people infected with Omicron compared with the Delta strain.
Meanwhile, the risk-on mood, along with the Federal Reserve hawkish outlook, pushed the yield on the benchmark 10-year US government bond closer to the 1.50 percent threshold. This further acted as a headwind for the non-yielding yellow metal. It is worth recalling that the Fed announced that it would double the pace of tapering to $30 billion per month.
From a technical perspective, gold is neutral-to-bullish in the near term and faces immediate resistance at $1,831. The next level of resistance lies at $1,842.
On the flip side, the gold price enjoys strong support at 1,820.25, last week’s earlier high level. The next downside target is seen at $1,803 and the next level of resistance is at psychological level of $1,800. – TLTP