Insights 
VT 
Trade Tensions And Geopolitical Strategies
Gold prices in Pakistan increased on Thursday. The price per gram rose to 38,265.29 Pakistani Rupees (PKR) from 38,030.31 PKR. The price per tola also went up to PKR 446,322.00 compared to PKR 443,578.10 the previous day.
The US government shutdown continued into the third week with no resolution. A missed Senate vote on a stopgap funding bill led to concerns about a potential $15 billion weekly loss in US economic output.
Trade tensions between the US and China intensified, affecting market dynamics. President Trump considered ending the cooking oil trade with China due to soybean purchasing issues, while discussions on duties and export controls continued.
US geopolitical strategies included Defense Secretary warnings to Russia over Ukraine and discussions on providing Ukraine with Tomahawk missiles. Economic discussions included Federal Reserve Chair Powell’s suggestions of rate cuts, influencing market expectations.
The US Dollar, weakening during the Asian session, impacted Gold prices positively. Speeches from FOMC members are anticipated to provide further direction regarding possible rate cuts and affect Gold’s market momentum.
Gold prices are calculated by FXStreet, converting international prices to local currency using the USD/PKR rate. Rates serve as reference points, with local variations possible. Gold is a preferred asset during uncertainty, held by central banks and influenced by economic factors such as interest rates and geopolitical conditions.
Gold Market Momentum And Strategy
The current market environment presents a clear signal for bullish strategies on gold, with derivative traders seeing multiple reinforcing factors. A weakening US Dollar, combined with market expectations for Federal Reserve rate cuts in both October and December, creates a powerful tailwind for the metal. These financial factors are amplified by ongoing geopolitical tensions and the prolonged US government shutdown, which are driving significant safe-haven demand.
We are seeing gold build upon the momentum from its record-setting run in 2024, when prices first pushed past the $2,400 per ounce level. This upward pressure is reinforced by persistent central bank demand, which has continued the aggressive buying spree we witnessed when over 1,000 tonnes were added to reserves annually in 2022 and 2023. The sustained purchasing by these institutions provides a strong underlying floor for the market.
Given this backdrop, traders should consider establishing long positions through gold futures or buying call options to capitalize on expected price increases. The dovish Federal Reserve stance significantly lowers the opportunity cost of holding a non-yielding asset like gold, making these bullish bets more attractive. Watching upcoming speeches by FOMC members will be critical for timing entries, as any further dovish language could trigger the next leg up.
The US Dollar’s decline to a fresh low is a key component of this trade, breaking the choppy but resilient range we saw it hold for much of 2024. An outright short position on the US Dollar Index (DXY) or buying put options on dollar-tracking ETFs could serve as a direct play on this weakness. The estimated $15 billion weekly economic loss from the shutdown, reminiscent of the damage from the 35-day closure back in 2018-2019, will likely keep weighing on the currency.
