June 14, 2023 (MLN): Domestic bullion continued the downward trajectory on Wednesday, attributed to the continued strengthening of PKR in the open market.

Consequently, 24-karat gold closed the day at Rs219,000 per tola, falling by Rs2,500.

Notably, gold prices have experienced a significant decline of Rs21,500 per tola since reaching its peak on May 11 at Rs240,500 per tola.

According to the Karachi Sarafa Association, the price of 10-gram 24-karat gold reached Rs187,757 per tola, down by Rs2,143.

While 10-gram 22-karat gold stood at Rs172,111 per tola, down by Rs1,964.

Similarly, the price of silver fell in the domestic market, with 24-karat silver falling by Rs100 to close at Rs2,550 per tola and the price of 10-gram 24-karat silver reaching Rs2,186 per tola, losing Rs85.73.

On the other hand, international spot gold is currently trading at $1,957.01 growing by 0.68% on the day.

Gold is widely considered an inflation hedge, as investors seek its safety during periods of high inflation.

Slowing inflation makes the yellow metal lose its shine, the U.S. CPI inflation has fallen from a peak of 9.1% in June 2022 to 4% in May 2023.

This indicates moderation of inflationary pressures, consequently, gold has remained relatively stable as compared to other financial assets that have been rallying for the past few weeks.

CPI in the last year, May 2022 stood at 8.6% YoY, showing that the federal reserve with its fast-paced rate hikes and balance sheet reductions has been successful in curbing inflation to some extent.

Moreover, CME FedWatch Tool is pricing in a 97.7% chance of interest rates pause in today's meeting at 11:00 pm PST.

Interest rates and gold have an inverse relationship, as in an environment of high-interest rates, gold loses its attractiveness.

Thereby, Market participants are now closely monitoring the upcoming Federal reserve open committee figures for June due to be released on Friday.

Furthermore, the U.S. dollar index (DXY) has also declined, currently 0.53% lower on the day, this makes dollar-denominated gold cheaper for investors holding other currencies. 

Meanwhile, International spot silver is currently trading at $24.03, growing by 1.52% on the day.

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Posted on: 2023-06-14T21:52:02+05:00