PakStox Outlook

Gold prices rose on Tuesday after falling for two days due to rising geopolitical tensions in the Middle East. Reports suggested that Lebanese troops withdrew from the border with Israel as an Israeli ground invasion seemed likely after Israel killed Hezbollah's leader. This escalation increased demand for safe-haven assets like gold. However, gains were limited by Fed Chair Powell's comments that the recent large interest rate cut should not signal future aggressive cuts. He hinted at smaller future cuts of a quarter percentage point. The odds of another 50-basis-point rate cut in November have now dropped to 37% from over 50% last week.

Gold has surged by over 17% since mid-February this year, in just around 50 days. The ascent has been consistent, with minimal retracements, and it has now reached historic highs of over $2300 per ounce. Yesterday, a news report revealed that China’s central bank continued its gold purchasing streak for the 17th consecutive month in March, contributing to the precious metal's record surge. This makes sense, since it is typically, it's central bank buying or selling that triggers significant movements in gold prices. Previously, gold futures had reached a high of nearly $2100 in August 2020. This move was in line with the declining trend in US 10-year bond rates, which plummeted to their lowest point in a decade, dipping below 1%. In consequence, gold rose and reached a historic high.  However, starting in August 2020, interest rates began to climb, eventually US 10 year note surpassing 4% over the next two years. During this time, Gold experienced a consistent decline, falling ...