Bullion investors reap rewards as 24-Karat gold surges by Rs5,700 per tola

December 14, 2023 (MLN): Gold prices in Pakistan witnessed a robust rebound on Thursday, eliminating almost all losses from the past five sessions, driven by a notable upswing in international markets.

The Karachi Sarafa Association reported that the price of 24-karat gold surged by Rs5,700 per tola to settle today’s trading session at Rs218,300.

Similarly, the price of 10-gram 24-karat gold settled at Rs187,157, reflecting a gain of Rs4,887.

While 10-gram 22-karat gold stood at Rs171,561.

The price of silver also increased in the domestic market, with 24-karat silver and 10-gram 24-karat silver closing at Rs 2,650 and Rs 2,271.94.

It is crucial to highlight that this positive session follows a streak of five consecutive losses, in which the domestic bullion market faced a cumulative loss of Rs6,300 for the 24-karat.

International gold price was under pressure after stronger-than-expected jobs data trimmed bets for U.S. interest rate cuts.

However, prices recovered smoothly on Wednesday as the US Federal Reserve kept interest rates unchanged at 5.25%-5.5% and indicated cumulative rate cuts of 75 basis points in 2024.

This resulted in increased pressure on treasury yields and the dollar, leading to a substantial 2.43% surge in international spot gold, closing the day at $2,027.58.

A weak dollar makes gold more affordable for holders of other currencies, exerting a positive impact on gold prices.

Similarly, lower bond yields also impose a positive impact on the metal as they reduce the opportunity cost of holding the safe-haven asset.

International spot gold is currently trading at $2,039.76, extending gains with an increase of $10.89 or 0.60% on the day.

In the domestic market, gold prices are also influenced by fluctuations in the local exchange rate.

The Pakistani rupee (PKR) is on track for another daily win against the U.S. Dollar due to the positivity arising from the successful staff-level agreement (SLA) between the International Monetary Fund (IMF) and Pakistan and the reduction in the current account deficit for November.

Since gold is denominated in U.S. dollars, when the domestic currency appreciates against the greenback, the value of PKR-denominated gold falls.

However, the surge in the international market overshadowed the appreciation in the local unit, ultimately leading to gains for the domestic bullion market.

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