Gold prices continued to rise in Pakistan for the eighth consecutive day as investors took refuge in the safe-haven asset to avoid the impact of high inflation.
Gold prices surged by Rs500 per tola and Rs429 per 10 grams to settle a historic high of Rs170,900 and Rs146,519, data released by All Pakistan Sarafa Gems and Jewellers Association (APSGJA) showed.
Moreover, silver prices held firm ground at an all-time high of Rs1,990 and Rs1,706.10.
The association mentioned that although gold hit an all-time high in Pakistan, its price still stood below cost. Gold is cheaper by Rs3,000 per tola compared to its price in Dubai.
The local prices are based on rupee-dollar parity and international rates. According to market practice, local prices of gold usually go down on the rupee’s appreciation against the US dollar and rising prices of commodities in the international market.
Rupee depreciation against the US dollar triggered a rally in the gold market, leading to an increase of Rs8,350 per tola in the last eight sessions.
In the international market, gold prices retreated more than 1%, falling to their lowest in a week. The dollar strengthened after the US Federal Reserve signalled higher interest rates for a longer period.
The price settled at $1,778 after a decline of $30 per ounce.
It should be noted that the Fed raised interest rates by half a percentage point and projected at least an additional 75 basis points of increases in borrowing costs by the end of 2023.
Gold is traditionally considered an inflation hedge but higher interest rates dim bullion’s appeal by increasing the opportunity cost of holding the non-yielding metal.
Commodities experts cite a shortage of US currency as the major reason behind the constant increase in gold prices in the local market.
“Investors want to invest in the dollar because of the rising difference between the open market and the interbank market rate, which is around Rs20-30; however, despite the significant difference dollar isn’t available and people are concerned about the financial situation in Pakistan and chances of default,” he explained the reason behind sudden shift in investors focus.
He added that because of the speculations that the dollar can reach 350-400 against the rupee; investors were trying to invest in the precious commodity.
“However, due to its [dollar] shortage they have shifted their focus toward gold as the price of the yellow metal is also rising in the international market,” Agar maintained.
UAE President Sheikh Mohamed Bin Zayed Al Nahyan assures PM Shehbaz Sharif of full support to Pakistan
In interbank market, greenback closes at 230.89 and loses 0.58 of its value
Dollar expected to be traded at Rs254-257 after cap removal, says ECAP General Secretary Zafar Paracha
SBP raises interest rate by 100bps taking total increase to 750bps since Jan 2022
SBP directs banks to prioritise import of certain essential items like food, pharmaceutical, energy
Market foresees a 100-200bps hike on cards as central bank aims to tame surging inflation
Copyright © 2023. The News International, All Rights Reserved | Contact Us | Authors