WEB DESK: Gold’s ongoing rally could see further gains as the US Federal Reserve is expected to shift towards monetary easing next week, historical data suggests
The Federal Reserve is set to announce an interest rate cut on Wednesday, but the size of the reduction remains a point of debate among market analysts. Typically, market consensus is aligned, but this time opinions are split over whether the cut will be 25 or 50 basis points.
While a 25 basis point reduction remains the slightly more probable outcome, traders are increasingly betting on a larger 50 basis point cut. According to the CME FedWatch Tool, the likelihood of a 50 basis point cut has risen to nearly 50 per cent, up from 30 per cent last week.
Thus, the key question is not if the Fed will lower rates, but by how much. Historical trends indicate that the start of a rate-cutting cycle tends to favour gold prices significantly. In fact, on average, gold prices have seen a 3.9 per cent increase within a month after the first rate cut.
Pakistan’s gold prices hit record high
In Pakistan, gold prices continued their upward trend on Saturday, mirroring international market movements. The price of gold per tola (11.66 grammes) surged by Rs400, reaching a record-breaking Rs266,300, according to the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA).
The price of 10 grammes of gold also saw a rise of Rs343, selling at Rs228,309. This follows a sharp increase on Friday, when gold prices jumped by Rs2,900 to settle at Rs265,900 per tola.
The upward momentum in local gold prices reflects the global anticipation of the Federal Reserve’s monetary easing, which historically has boosted gold as a safe-haven asset.
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