Trade Tensions and Geopolitical Strategies

On Thursday, gold prices in Pakistan went up. The cost per gram rose from 38,030.31 Pakistani Rupees (PKR) to 38,265.29 PKR. The price for a tola also increased, reaching PKR 446,322.00, compared to PKR 443,578.10 the day before. The US government shutdown has now entered its third week without a solution. A missed Senate vote on a temporary funding bill has raised concerns about a potential weekly loss of $15 billion in US economic output. Trade tensions between the US and China have escalated. President Trump is considering halting the cooking oil trade with China because of soybean purchasing issues. Meanwhile, discussions about tariffs and export controls are ongoing. In US geopolitical news, Defense Secretary warned Russia about Ukraine and discussed providing Ukraine with Tomahawk missiles. Economic talks also featured Federal Reserve Chair Powell’s hints at possible rate cuts, which could affect market outlook. The US Dollar weakened during the Asian session, which had a positive effect on gold prices. Speeches from FOMC members are expected to clarify expectations about possible rate cuts, which may influence gold’s market movement. Gold prices are calculated by FXStreet, which converts international prices to local currency using the USD/PKR exchange rate. These rates are reference points, and local prices may vary. Gold is a preferred asset during uncertain times, often held by central banks and affected by factors like interest rates and geopolitical events.

Gold Market Momentum and Strategy

The current market conditions signal strong bullish strategies for gold, with traders noting several supportive factors. A declining US Dollar, along with expectations for Federal Reserve rate cuts in October and December, creates a favorable environment for gold. These financial factors are further supported by ongoing geopolitical tensions and the US government shutdown, driving safe-haven demand. Gold is building on momentum from its record highs in 2024, when prices first exceeded $2,400 per ounce. Strong central bank demand reinforces this upward pressure, as these institutions added over 1,000 tonnes to their reserves annually in 2022 and 2023. This persistent buying creates a solid foundation for the market. In this context, traders should consider long positions through gold futures or buying call options to take advantage of price increases. The Federal Reserve’s dovish stance reduces the cost of holding non-yielding assets like gold, making these bullish strategies more appealing. Keeping an eye on upcoming FOMC speeches will be crucial for timing, as any dovish remarks could spark further price increases. The US Dollar’s drop to a new low is an important factor in this trade, breaking out of the inconsistent range it maintained for most of 2024. Taking a short position on the US Dollar Index (DXY) or buying put options on dollar-indexed ETFs could be a direct play on this weakness. The estimated $15 billion weekly economic loss from the shutdown, similar to the impact of the 35-day closure from 2018-2019, is likely to continue affecting the currency. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now