April 10, 2023 (MLN): Gold continues to shine going into the second week of the second quarter of 2023, and the price of gold continues to show a positive trend for investors. Currently, the precious metal is trading at Rs216,745.60 per tola, representing a notable increase of 17.86% year-to-date.
Similar to the previous quarter, the main driver behind the rise in gold prices is the prevailing economic uncertainty and instability.
The Pakistani Rupee (PKR) has continued to depreciate against major currencies, falling by 20.07% against the US Dollar since the beginning of the year.
This has made it harder for businesses and individuals to access foreign exchange, further contributing to the shortage of dollars in the open market.
Moreover, the macroeconomic situation in the country has continued to deteriorate, with high inflation rates, 35.4% YoY in March 2023, and a widening fiscal deficit. As a result, investors have turned to gold as a safe haven asset to hedge against the risks associated with these economic challenges.
It was crucial for gold to close its quarter weekly candle on March 31, 2023, above (white line), which is around $1990-$2000 per ounce, which it failed to achieve, as shown in XAUUSD weekly timeframe chart below.
However, in the first week of the second quarter, gold showed an impressive performance by recording one of the highest intra-day gains in 2023 of +1.84%. It finally managed to close its first weekly candle above the crucial resistance level (white line), which is a significant achievement for the market.
At the time of writing, gold is trading at $1995 and is retesting the green box. It is crucial for gold to hold this level short-term to continue its momentum. Any signs of weakness, such as a failure to hold the green box, could indicate a potential reversal in the market. Therefore, investors should closely monitor the market movement and be cautious with their investments.
The recently released US Nonfarm Payrolls (NFP) figures, which exceeded expectations and showed US added 236,000 jobs, have reignited speculation about a potential 25 basis point rate hike by the US Federal Reserve, as opposed to the previously anticipated inaction.
However, it should be noted that the underwhelming US Treasury bond yields, coupled with weak US economic data, are boosting the US Dollar bulls, while simultaneously giving hope to Gold buyers ahead of the release of the US Consumer Price Index (CPI) data and the latest Federal Open Market Committee (FOMC) Monetary Policy Meeting Minutes.
The S&P 500 Futures have seen a mild decline around $4129.50 after two days of gains.
US 10-year and two-year Treasury bond yields are under pressure, hovering around 3.36% and 3.93% respectively.
This has led to a decrease in benchmark bond coupons from the previous day's levels, indicating the market's rush towards risk safety amidst concerns of economic slowdown.
Furthermore, the US Dollar Index (DXY) has shown mild gains currently standing at around 102.02, continuing its recovery from a two-month low that began last Tuesday.
As move deeper into the second quarter of 2023, it is clear that gold remains a crucial asset for investors navigating through the tumultuous global economic landscape.
With the PKR depreciating against major currencies and the macroeconomic situation in Pakistan continuing to worsen, investors have sought the safety of gold to protect their wealth.
However, as the market faces potential headwinds from the US Federal Reserve and ongoing economic concerns, investors must remain vigilant and carefully monitor market movements to make informed investment decisions.
Copyright Mettis Link News
Posted on: 2023-04-10T14:43:21+05:00
