Stocks, gold steady amid political upheaval

Global stocks steadied Tuesday and gold hovered near a fresh record high as investors sought safety amid a US government shutdown and political upheaval in France.

French shares edged higher while the euro held losses after President Emmanuel Macron called on outgoing Prime Minister Sébastien Lecornu to salvage his administration.

Lecornu, who resigned Monday after less than a month in office, was tasked with gaining cross-party support for a cabinet lineup to pull France out of political deadlock.

London and Frankfurt also rose in midday trading.

Gold hit a new peak of $3,977.44 an ounce Tuesday before slightly paring gains, as investors eyed the US government shutdown, with Republicans and Democrats appearing no closer to a deal.

Bets on a Federal Reserve rate cut this month and France’s political turmoil further boosted demand for the safe-haven metal.

Pakistan’s economy to grow by 2.6% amid flood damage, says World Bank

“The rally in gold is part of the ‘debasement trade’,” said Kathleen Brooks, research director at trading group XTB.
“This trading theme is driving demand for alternative assets such as gold and crypto, as the dollar faces a long-term decline and fiscal concerns rise globally,” she added.

In Asia, Tokyo eked out another record following the weekend election of a pro-stimulus advocate to lead Japan’s ruling party, before trimming gains to close flat.

Hong Kong and Shanghai were closed for holidays.

The election of Sanae Takaichi — expected to become Japan’s prime minister this month — fuelled optimism she will jump-start the economy through stimulus measures.

That sent the Nikkei 225 soaring almost five percent Monday and hammered the yen, as investors questioned whether the Bank of Japan would continue its rate hikes.

“Her agenda is expected to continue a blend of fiscal support and ultra-easy monetary policy,” said Saxo Markets’ chief investment strategist, Charu Chanana.

Yields on 30-year Japanese bonds hit their highest level, reflecting fears the country’s already colossal debt will swell further.

Meanwhile, a wave of AI-related deals has fuelled optimism for tech stocks, helping push several global markets to fresh highs this year.

The latest came Monday when Advanced Micro Devices and OpenAI announced a partnership to develop AI data centres, propelling the S&P 500 and Nasdaq to record closes in New York.

While some analysts worry about overinvestment in AI, OpenAI’s Fidji Simo told AFP she does not see a bubble forming.

“I see that as a new normal,” said Simo, chief operating officer of OpenAI’s applications, including its flagship model ChatGPT. “The world is going to realise that computing power is the most strategic resource.”

Gold rates in Pakistan

Meanwhile, gold rates in Pakistan continued their upward streak on Tuesday, mirroring gains in the international market, as investors turned to the precious metal amid growing uncertainty in global markets.

According to the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA), the price of 24-karat gold rose by Rs1,500 per tola, reaching a new record high of Rs416,778. The price of 10-gramme gold also climbed by Rs1,286 to Rs357,319.

On Monday, the gold price had already witnessed a hefty rise of Rs5,400 per tola, taking it to Rs415,278.

In contrast, silver prices in the local market slipped by Rs20 per tola, settling at Rs4,929.

Analysts eye further gains

Market experts expect gold’s rally to continue in the coming months. Michael Langford, chief investment officer at Scorpion Minerals, projected that gold could reach $4,300 per ounce within the next six months as the US dollar continues to weaken and global risks remain elevated.

Demand likely to stay strong

With inflation concerns, a softer dollar, and lingering geopolitical tensions, analysts expect gold’s appeal to remain strong among both institutional and retail investors.

For many in Pakistan, gold continues to be seen not just as a luxury asset but also as a trusted store of value amid currency fluctuations and rising inflation, keeping demand resilient despite record-high prices.