July 21, 2023 (MLN): Domestic bullion rebounded on Friday, with 24-karat gold reaching Rs222,900 per tola, rising by Rs1,800.

The appreciation in gold prices can be attributed depreciation of the Pakistani rupee against the US dollar.

It is worth noting that PKR has witnessed a week of continuous depreciation, to lose a total of Rs9.22 or 3.21%  WoW against the USD.

Since gold is denominated in U.S. dollars when the PKR depreciates against the U.S. dollar, the value of PKR-denominated gold rises.

The Karachi Sarafa Association, a reputable jeweler in the precious metals market, reported that the price of 10-gram 24-karat gold reached Rs191,100 per tola, reflecting a rise of Rs1,542.

While 10-gram 22-karat gold stood at Rs175,176 per tola, rising by Rs1,415.

In contrast, the price of silver dropped in the domestic market, with 24-karat silver falling by Rs150 to close at Rs2,750 per tola and the price of 10-gram 24-karat silver closing at Rs2,358 per tola, losing Rs128.60

On the other hand, international spot gold is currently trading at $1,966.86 down by 0.10% on the day.

The dollar rebounded to its highest in more than a week after positive weekly U.S. jobs data renewed uncertainty over whether the Federal Reserve will stop raising interest rates after an expected increase next week, as Reuters reported.

Moreover, the U.S. dollar index (DXY) is currently 0.26% higher on the day, this makes dollar-denominated gold expensive for investors holding other currencies. 

“If the Fed lends credence to market expectations for no further rate hikes after this month, that may help bullion bulls reclaim the $2,000 handle,” Exinity Chief Market Analyst Han Tan said.

CME FedWatch Tool is pricing in a 99.8% chance of an interest rate hike at the upcoming July 26 meeting.

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

Meanwhile, international spot silver is currently trading at $24.84, rising by 0.48% on the day.

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Posted on: 2023-07-21T18:29:35+05:00