Gold prices in Pakistan fell on Friday. The price per gram decreased to 30,599.02 PKR from 30,754.37 PKR the day before. The price per tola also dropped to 356,900.50 PKR from 358,713.00 PKR. The US Federal Reserve has decided to keep interest rates steady and expects two rate cuts by 2025. However, only one rate cut is predicted for 2026 and 2027 because of ongoing inflation worries.

Global Risk Sentiment

Global risk sentiment remains fragile due to trade uncertainties and geopolitical tensions, especially in the Middle East. Ongoing tensions between Iran and Israel, along with possible US involvement, raise fears of a broader conflict. The US Dollar retreated after recent market activities, which may help support commodity prices like gold. This situation suggests stability for gold prices, and some buying activity is expected as prices drop. Gold is often seen as a safe-haven asset during difficult times, and central banks are significant buyers. The price of gold is influenced by factors such as geopolitical stability, interest rates, and the strength of the US Dollar. Although the drop in gold prices seems small, it signals a shift in sentiment after the Fed’s recent announcement. By maintaining interest rates and indicating a slower timeline for cuts, the Fed showed concern about persistent inflation. Chairman Powell’s comments did not offer much hope for those anticipating quick monetary easing, as the projection for just one rate cut in 2026 and 2027 suggests.

Geopolitical Risks and Market Sentiment

For traders of derivatives linked to commodities like gold, the Fed’s caution should prompt a reassessment of medium-term strategies. Although nominal yields haven’t dramatically increased, they remain elevated, limiting gold’s upside momentum in the short term, despite a weaker Dollar. Geopolitical risks are still high, particularly in the Middle East. Tensions between Tehran and Tel Aviv continue to dominate headlines, and potential American involvement keeps markets in a wait-and-see approach. This caution tends to increase demand for safe-haven assets, though recent reactions have been muted. Currently, we observe selective hedging rather than significant trading volume. Notably, the Dollar pulled back after the Fed’s announcement—possibly a minor correction or a reflection of revised rate expectations. This reduction has eased some pressure on Dollar-denominated assets, creating a supportive base for commodities. Gold tends to benefit when the Dollar weakens, as its price becomes more appealing internationally. A lower Dollar generally increases buying interest from non-US markets. Support levels are currently being tested, providing opportunities. While investments in physically-backed ETFs have slowed, market interest remains. Long-term buyers may not pursue recent highs but are often ready to re-enter at attractive price levels, especially if inflation persists and geopolitical tensions remain. If regional conflicts escalate, we can expect increased interest in defensive assets. Traders should prepare for wider bid-ask spreads in such scenarios, especially in times of low liquidity. Conversely, unexpected news from the next Fed meeting or signs of economic softening in the US could renew a dovish outlook, reviving bullish bets on gold. Sharp price changes are unlikely unless a clear trigger appears. For now, focus on where buying resumes. If prices test previous support zones and buying increases, it’s a reasonable opportunity for short-term trading. Caution is advised with leverage, particularly as macro risks rise and holiday trading volumes dwindle. Any short positions should be closely monitored and not left unattended if significant news breaks. Although gold remains within a broad trading range, we see early signs of accumulation at lower levels. Pay attention to shifts in open interest and how implied volatility reacts during significant intraday movements, as these often provide clearer insights than price alone. Also, keep an eye on the commitment of traders data—renewed long positions by large speculators often signal upcoming directional moves. Create your live VT Markets account and start trading now.

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