Gold prices have broken yet another record, surging past $4,070 an ounce on July 21 as softer-than-expected US inflation data revived hopes of Federal Reserve rate cuts. A weaker US dollar and continuing geopolitical tensions in the Middle East also helped gold, further entrenching gold’s status as the world’s safe-haven asset of choice.

The precious metal opened near $4,008, before breaking the key resistance level of $4,040 in European trading hours. On the technical front, the momentum remains bullish, but some market analysts caution that the uptrend could experience short-term corrections with support levels observed around $4,014 and $3,970.

The international rally is expected to have an immediate impact on local bullion market in Pakistan. Domestic price of gold is mainly determined by global rates and rupee-dollar exchange rate. Local gold prices could climb even higher if the rupee continues to feel the pressure, making jewellery more expensive while also boosting the value of existing gold holdings.

The international rally has already trickled down to Pakistan's bullions market. The All Pakistan Sarafa Gems and Jewellers Association (APSGJA) said 24-karat gold is being sold at Rs424,536 per tola today while 10 grams are being sold at Rs363,713. The spike is on the back of the twin impact of record international prices and fluctuations in rupee-dollar exchange rate. While jewellery buyers will face the brunt of high costs, investors holding physical gold will gain.

The surge also comes as many Pakistani investors are looking for safer places to invest amid concerns about inflation and economic uncertainty. Gold has always been a safe haven from the depreciation of currencies and rising prices and is therefore an attractive option in volatile market situations.

But experts caution against trying to chase record-high prices without considering market risks. Gold traders this week are waiting for U.S. economic data and Federal Reserve commentary that could decide whether the precious metal continues its rally or takes a breather.

The next few weeks will be critical for Pakistani investors to see whether the precious metal sustains its record-breaking rally or goes into a period of price consolidation.

Credit: Independent News Pakistan (INP)